do I add these expenses to the capital improvements amount?
Yes. For example, if you spent $10,000 renovating the kitchen and it took a month to do so, you can include the cost of the utilities you paid for, as a part of the renovation cost. So if you paid $100 for electric/water that month, when entering the kitchen renovation costs in the Assets/Depreciation section, your cost basis on that asset would be $10,100, classified as rental real estate and depreciated over 27.5 years with depreciation starting on the date the asset is placed in service.
