Over the last 3 years I have been renovating a building I purchased. In 2007 I finally am running my business out of this building. Over the last 3 years I have paid real estate taxes, insurance, mortgage interest and utility bills. How do I handle each of these items on my tax return? Can I assume that each of these items can be capitalized and added to the basis of my building or should I have expenses them on the last 3 years tax returns. Does anyone know how I should handle each of these individual items on my 2007 tax return. Thank you so much for your help.

Only improvements are capital expenses. Property taxes, insurance and utility bills are not capital expenses. Expenses for a year must be reported in that year.
Also all expenses before start of the business are expenses that must be amortized. Now the amortization period is 180 months. The period starts with the month your active trade or business begins.

There IS a provision in the IRC that allows amortization of pre-start expenses over 60 months (five years) vice 180 months (15 years).

However, that option MUST be taken in the first tax return filed by the company. You cannot go back and amend for it.