sounds like I would be better off not depreciating the improvements then.
Depreciation really isn't an option per-se. If you don't depreciate the asset, then in the tax year you sell or otherwise dispose of the property, you are required to recapture the depreciation you should have taken, and pay tax on it.
Property improvements add to your cost basis of the property. If you don't enter them in the tax year placed in service, it can create a real nightmare dealing with it later; especially in the tax year you sell the property. Now outside of the AMT tax (which may kick in here, depending on the numbers), that refund or tax due number you see on the screen is really meaningless until you have completed your tax return in it's entirety. During the data entry process you'll see that number go all over the place - literally! So you really shouldn't pay much attention to it. Until you finish the return, when that number changes all it really means is "the program did something" and that's pretty much it. Remember, as you work through the program and see that number change, whatever is changes to is based "only" on the information the program has "at this specific and exlicit point in time". For example, if you're entering data in the program the way it's designed and intended to be used, you'll be entering your rental data long before you enter any of your "personal" income, and definitely before you enter anything under the Deductions & Credits tab. So don't let that refund/tax due number phase you at all until you have finished your tax return entirely.
Also keep in mind that if you're also doing a state return, it's not at all uncommon for things to change on that "finished" federal return as you work through the state return entering data. That's the primary reason why you should not file "any" return, until you have completed, checked and verified "all" returns you are completing with the program. This really comes into play when one is filing more than one state return.
