Co-op, condo owners and board members understand certain truths; one is that whether aesthetic, mechanical or otherwise, every building will require repair, upgrades and improvements. Determining what is a capital project versus what is a cosmetic project is often confusing and can cause significant problems when determining budgets and project timelines.
The New York State Department of Taxation and Finance (NYS DTF) spells out the difference clearly in its Publication 862: Sales and Use Tax Classifications of Capital Improvements and Repairs to Real Property.
A capital improvement is an addition or alteration to real property that:
• Substantially adds to the value of the real property, or appreciably prolongs the useful life of the real property;
• Becomes part of the real property or is permanently affixed to the real property so that removal would cause material damage to the property or article itself; and is intended to become a permanent installation.