Yes. Enter them on this tax return, 2021, since the expenses were made and improvements were done in 2021. You will report the sale on next year's return. But for this return, enter your rental income and expenses, including depreciation for 2021 on this tax return.
How do I handle capital improvements and depreciation for my rental? Capital improvements that add to the value of your rental property, prolong its life, or adapt it to new uses must be depreciated over a period of time rather than deducted as a current-year expense.
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