Capital Repairs or Capital Improvements
Commercial buildings might require capital repairs or capital improvements to boost its condition beyond its original or current state. You may wish to undertake capital improvements for a number of reasons including:
Increasing an asset’s useful function or service capacity
Extending the useful life of the building
Enhancing the quality of services
Reducing future operating costs
Upgrading essential parts
To be considered a capital repair or capital improvement, the renovation or construction must:
Substantially add value to the real property, or appreciably prolong the useful life of the real property
Become part of the real property or permanently affixed to the real property so that removal would cause material damage to the property or article itself
Be intended to become a permanent installation
When we help businesses decide if the expenditure is regular maintenance or a capital improvement, we look at the value of the asset, the intended goal of the work to be performed, the scope of the work, the actual result and its impact on the value, depreciation, and equity return.
At BRInc, we can handle capital improvements of all varieties including exterior improvement, interior improvement, new construction to the building, and accessibility improvements. We are fully knowledgeable about the tax ramifications that come with capital repairs or capital improvement and can help commercial building owners with the paperwork.