1. Money
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Capital Improvements - Capital Expenditures

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Definition:

Capital improvements are costs related to making changes to improve capital assets, increase their useful life, or add to the value of these assets. Capital improvements may be structural improvements or other renovations to a building, or they may enhance usefulness or productivity.

Capital improvements, which must be capitalized, are distinguished from deductible repairs, which are more minor in nature. For example, the following are considered deductible repairs:

  • wallpapering and painting
  • caulking seams
  • repairing a roof
  • mending plaster
  • replacing retaining walls, tuck pointing

These items are considered capital improvements:

  • installing new doors or windows or replacing doors and windows
  • replacing a roof
  • installing an air conditioning or ventilation systemb
  • installing a burglar alarm system
  • improving a storefront
Business startup costs are also considered as capital expenditures.

Also Known As: capital expenditure

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