are you a real estate professional? then the expenses (other than capital improvements to the property) would be deductible on schedule C. if not, here's the bad news.
you can include in the basis of the property the cost associated with improvements. since it was never rented, the mortgage interest becomes investment interest report on form 4952 schedule A. This is under IRS tracing rules. other expenses are investment expenses which are no longer deductible.
convert to a two-family, and rent out one of the apartments.
So does that mean you were planning to use the other one as your home? Did you actually use it as your home?
Since I purchased the property with an investment loan I can't claim it as my principal residence.
The loan has nothing to do with claiming it as your Principal Residence. WAS it your Principal Residence? If so, why did you move (in some situations, you may be able to exclude the gain)?
I've entered the sale in the business section
In the business section? You have not indicated anything that would have you enter it in the business section. Unless you have an ongoing business of buying, renovating and selling houses, entering it in the business section is probably wrong.
For tax purposes and for your specific and explicit situation, this was never rental property in any way, shape or form since you never even "attempted" to rent it out. It's investment property.
You'll report it in the investments section under the Personal Income tab as the sale of an investment or 2nd home. The fact you purchased it with an investment loan is irrelevant and doesn't matter really.
Elect to start/update Stocks, Mutual Funds, Bonds, Other
Select YES to indicate you sold an investment in 2019
Select NO to indicate you did not get a 1099-B or brokerage statement for this investment sale.
If you sold this property at a gain, elect "2nd home". If sold at a loss, select "Everything Else". (If sold at a loss and you select 2nd home, then your losses on this investment if any, are "NOT" deductible.)
For "Cost or other basis" click the learn more link and you'll see that what you will enter here will include what you paid for it, along with what you paid for any property improvements, if any.
If you owned the property less than a year then you'll pay the short term capital gains tax rate on any gain. Also, you can increase your cost basis by the insurance and property taxes you paid, as those would be your "carrying cost" of the investment. Make sure to keep your paperwork to prove those carrying costs, if audited.