Capital Improvement

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DEFINITION of 'Capital Improvement'

The addition of a permanent structural improvement or the restoration of some aspect of a property that will either enhance the property's overall value or increases its useful life. Although the scale of the capital improvement can vary, capital improvements can be made by both individual homeowners and large-scale property owners.

BREAKING DOWN 'Capital Improvement'

For example, if Jack buys a new hot water heater and tool shed for his property, both would be considered capital improvements to his house. Similarly, the creation of a new public park in the downtown area would also be considered a capital improvement for the city. In both these cases, the new additions would make the respective properties more valuable.

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