Defining Your Capital Improvement Project A Capital Idea

A capital improvement, as the name suggests, is any property enhancement—or "improvement"—that increases its overall value—or "capital." Capital improvements can be undertaken by individual owners as well as co-op or condo boards. The range of what constitutes capital improvements is vast. Installing a new window in the bathroom of a single unit is a capital improvement; so is installing a new roof for every tower in Co-op City.

Whether or not an improvement is considered capital or not is important for one reason and one reason only: money. How an improvement is classified has a pronounced effect on taxes, both individual and collective. In some cases, it is more prudent to have an enhancement classified as a capital improvement. In other cases, it is more prudent to write the cost off as a simple business expense. In the case of a co-op, the former is usually preferable—but not always.

Not Always Black-and-White

Interior design is more of a gray area in terms of capital improvements. Often, some aspects of an interior design project—like upgrading electrical systems, or installing new walls and windows—are considered capital improvements, while others—such as fresh paint—are not.

Complicating matters is the fact that the tax codes governing co-ops are vastly different from the ones governing condominiums. A new roof, for example, is a capital improvement in a co-op, but not in a condo.

Before you vote on whether or not to proceed with an interior design project in your building or individual unit this year, find out whether it classifies as a capital improvement. The answer will have far reaching effects—both potentially negative or potentially positive—on your bottom line.


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  • can capital cost (pool heater) be added to the cost of purchase when selling. i live in a condo
  • on Sunday, March 15, 2009 7:33 PM
    redoing & repairing the rented house that was invaded with bees at a cost of $23,000. Is this a repair or does this get depreciated or amortized over 15 years.
  • is repairing a private road in a home owners asso. community a capital improvement or regular maintainance?
  • Can a condo board do over patios that they enlarge onto part of the common area for half of the condo owners, in this instance 36 owners, while having the other 36 owners pay for them too even though they don't use them as a common area and they are restricted to the owners of the units who have them?
  • Jan, I guess that you can say that this is similar to an elevator modernization where the 1st floor residents who have never stepped foot in the elevator have to pay their share. As long as it is considered common area property and it is listed as such in the Offering Plan, you will need to pay your portion.
  • Is building a deck (two and one half feet higher) over a cement patio a capital improvement?
  • was there any response to the road repair in a home owners association?
  • Would redoing deck railings including the spindles (decks are considered to be limited common areas) be considered an operating expense or a capital improvements. They are considering clading to cover the existing wood structure.
  • Is switching from a boiler central home heating system to an electric heating system a capital improvement?
  • I was just wondering if Paul H received an answer about the private road? If the association repaves the roads, is that a capital improvement? Is it a capital improvement if they replace an already working lift station with new?
  • Do you publish answers to questions raised in comments?
  • The Comments section of our website is intended for readers to leave remarks and thoughts they may have about our content - it's monitored for inappropriate or off-topic postings, but is not a direct Q&A-type forum. If you have a specific legal question, you may submit it to our Legal Q&A section. Just send your question to, and we will submit it to a legal professional for inclusion in a future edition of The Cooperator. All questions are kept anonymous. Thank you for your continued readership!
  • Ralph G. Waclawicz on Saturday, June 18, 2011 2:26 PM
    Does building a roof over an exsisting amenity which presntly doesnot have a roof over it qualify as a capital improvement?
  • Is painting of common walls and tree trimming in a home owner association community, capital improvements or routine maintenance?
  • On commercial property installing new HVAC unit - curbs is this a capital improvement.
  • If you replaced rook sky light sheeting which was only part of the roof,because the sky line sheets had deteriorated and the new sheeting had a long gaurantee would that be classified as a capital improvement or would you just write it off as repairs and maintenance.
  • I'm purchasing a new garage door, electric opener, a new entry door and storm door on my house. Is this a capital improvement and should I be charged sales tax? I live in New York City.
  • It's not mentioned in the article, but people should be aware -- capital improvement costs are generally not subject to sales tax. There is a NYS sales tax form the buyer submits to the contractor(s), certifying that the purchase is permanently incorporated into real property to improve its value or prolong its life. This changes the way sales tax is assessed: - no sales tax is due on the capital improvement work - the contractor pays sales tax to its suppliers on materials purchased for the job (whereas for a non-capital job they wouldn't; for maintenance/repair jobs they must purchase the items for resale, submitting a resale certificate instead of paying tax, and then sell them to the buyer and collect/remit the sales tax at that stage) This can avoid thousands of dollars in taxes on the cost of a big job. Almost everyone should be doing this properly already -- the contractor will typically know what's needed -- but it's worth mentioning here to complete the picture.
  • We are replacing the septic system for our restaurant. We will be paying in full. Do we expense the entire amount and then take depreciation each year or do we just expense it and that is the end of it?
  • Eric - Fishermans Wharf on Wednesday, August 22, 2012 2:44 PM
    Yes, Roadway Repairs can be considered Capital Improvement. In our case we are replacing our roads, curbs, sidewalks and drainage. In addition we are adding Security Gates to our community. Major well worthwhile project.
  • Is dredgeing of a small pond (1/2 acre) considered capital improvement or maintenance?
  • I want to update the electrical system in my rental property. Would this be considered a capital improvement when I sell it? I also plan to do some work on the foundation, as uncovered in an inspection. Would this be considered a capital improvement?
  • In a florida condo,my prime residence,are capital improvements to common areas tax deductible? Is there a amount limit i can claim ?
  • What GL would you use for a $100K deck replacement on a commercial property? I know I have to capitalize it, but don't know if I should personalize the GL, or class it to Building Improvements
  • In a town home community, is the replacement of some garages considered a capital improvement? And is it valid to spread the cost across all homeowners as a special assessment pending vote?
  • I am a contractor and I own the building in which my office and shop are housed. If I wanted to replace my roof using my roofing crew, can I file that as a capital improvement even though I am doing the job myself and not using another contractor?
  • Is vent cleaning of the whole building a capital improvement project?