Definition
Capital expenditures are major property improvements with useful life exceeding one year. CapEx improves property value and justifies rent increases.
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CapEx includes roof replacement, HVAC upgrades, foundation repair ($5,000+). Different from maintenance (deductible). Capitalized over useful life for tax purposes. Budget 1-2% annually for CapEx. Improves property value and quality. Property improvements justify rent increases. Timing affects investment returns. Planning prevents emergency expenses. Professional assessment identifies needed CapEx. Deferred maintenance increases CapEx risk. Life safety code compliance requires CapEx. Tax treatment critical to analysis.
Pro Tip
Distinguish CapEx from maintenance for accurate tax treatment.
Example
Roof replacement was CapEx capitalized and depreciated over 25 years.