Q. Do we just add a separate asset sheet and depreciate the improvement separately?
A. Yes.
Q. If I add a new asset (the improvements) for depreciation can I choose 40 yr again (or must I use the 27.5 default)?
A. You have an option, but it's now 27.5 or 30 years.
If you're using ADS (alternative depreciation system), the recovery period for the same type of property is 30 years for property placed in service after Dec. 31, 2017, or 40 years if placed in service prior to that.
Reference: https://www.investopedia.com/articles/investing/060815/how-rental-property-depreciation-works.asp
