Capital improvements are improvements or restorations of some aspect of a property that will increase the overall value. Capital improvements are not routine maintenance or repairs. A capital improvement goes above and beyond normal replacement of items.
Examples of capital improvements include:
- Replacing wall to wall carpet with hardwood floors
- Adding a new garage to a home
- Finishing the basement
- Completely remodeling the kitchen
- Adding a fireplace
- Putting on a deck
- Adding a bedroom or bathroom
Examples that do not qualify as capital improvements: