That would be added to basis when they are done with the construction.

I apologize for not giving you the whole picture. Is this still true if it crosses two tax years? Architect fees were paid in 2023, but construction may or may not be dine in 2024. If the client decides NOT to build-on, but sells the existing rental & replaces it with a larger property, how would I account for that?

I would still add it to basis.