Capital Improvement

What is 'Capital Improvement'

Capital improvement is 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.

RELATED TERMS
  1. Property Management

    The administration of residential, commercial and/or industrial ...
  2. Investment Property

    A real estate property that has been purchased with the intention ...
  3. Property Manager

    An individual or company responsible for the day-to-day functioning ...
  4. Property Tax

    A tax assessed on real estate by the local government. The tax ...
  5. Betterment Insurance

    Betterment insurance refers to insurance coverage that a tenant ...
  6. Form 4797

    A tax form distributed by the Internal Revenue Service (IRS) ...
Related Articles
  1. Home & Auto

    What You Should Know About Real Estate Valuation

    Anyone involved in a real transaction can benefit from gaining a basic understanding of the different methods of real estate valuation.
  2. Taxes

    Sell Your Rental Property For A Profit

    Being a landlord can be taxing, especially when you want to sell. Find out how to reduce your burden.
  3. Home & Auto

    Investing In Foreclosures Not A Get-Rich-Quick Venture

    Investing in this kind of real estate takes capital, time and careful planning.
  4. Economics

    How Property Rights Affect Economies

    Property rights are laws governments create that enable investors to control, benefit from, and transfer property.
  5. Home & Auto

    Investing In Property Out Of State

    If you can't afford property close to home, consider taking the real estate plunge elsewhere in the country.
  6. Home & Auto

    The Complete Guide To Becoming A Landlord: Hiring A Property Manager

    A property manager can perform such duties as marketing your rental property, selecting tenants, maintaining the property, creating budgets and collecting rent. You may consider hiring a property ...
  7. Professionals

    Expensing Policy

    Expensing Policy
  8. Professionals

    Community Property Vs. Non-Community Property

    Community Property Vs. Non-Community Property
  9. Home & Auto

    Exploring Real Estate Investments: Finding Investment Value

    By Ian Woychuk, CFA Real estate returns are generated in two ways. First, the income return comes from tenants' rent payments. The income return is a straightforward calculation because all you ...
  10. Home & Auto

    Your Property Tax Assessment: What Does It Mean?

    Property taxes are a primary source of revenue for governments, and they’re a big expense for homeowners. They can vary widely depending on where you live.
RELATED FAQS
  1. What key requirements must be met for the IRS to classify changes or alterations ...

    Learn the requirements needed to qualify for Internal Revenue Service tax breaks under the qualified lease improvement on ... Read Answer >>
  2. What is the importance of the capitalization rate in real estate investing?

    Find out why an investment property's capitalization rate is important to real estate investors and how it can be used to ... Read Answer >>
  3. How do REIT managers use capitalization rate to configure their portfolios?

    Learn how REIT managers use capitalization rates to help assess risk and identify properties as potential purchase and sale ... Read Answer >>
  4. How does total capital investment influence economic growth?

    Discover the basic relationship between capital investment and economic growth, and why improving the capital structure increases ... Read Answer >>
  5. What criteria does a property need to meet to be considered an 'investment grade' ...

    Learn what it takes for institutional investors to consider a property "investment grade," such as real estate investment ... Read Answer >>
  6. What do states do with unclaimed property?

    Understand what unclaimed property is and what types of property can be considered abandoned or unclaimed. Learn what states ... Read Answer >>
Hot Definitions
  1. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  2. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  3. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  4. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  6. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
Trading Center