Property Improvement

Property improvement refers to capital expenditures enhancing value, functionality, or extending useful life, distinct from routine maintenance and repairs.


Improvement TypeExamples
Major renovationFull kitchen or bathroom remodel
System upgradesNew HVAC, plumbing, electrical
AdditionsExtra bedroom, balcony enclosure
Structural improvementsFoundation repair, roof replacement
Efficiency upgradesSmart home systems, solar panels
Financial TreatmentApproach
Capital expenditureAdd to cost basis, not expensed
Value increaseTypically 50% to 80% of improvement cost
Rental impactCan justify 10% to 30% rent increase
ROI variesKitchen and bath renovations highest return
DepreciationCapitalized and depreciated over time

Related Terms

Capital Expenditure (CapEx)Value-AddNet Operating Income (NOI)Cost Basis

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