Is a New Roof a Capital Improvement or a Repair?
Full Question:
Answer:
Typically, a new roof is a capital improvement. A capital improvement, in and of itself, is not affected by either the dollar amount of, or the percentage amount of, any capital expenditure. In general, a capital improvement is defined either by contract or by various state and federal laws, but capital improvement generally is defined as a non-recurring expenditure or any expenditure for physical improvements, including costs for: acquisition of existing buildings, land, or interests in land; construction of new buildings or other structures, including additions and major alterations; construction of streets and highways or utility lines; acquisition of fixed equipment; landscaping; and similar expenditures. It may mean any change, alteration, rearrangement or addition to existing facilities. It is also new construction, acquisition or improvements to sites, buildings, or service systems.
In general, neither the dollar amount nor the percentage amount of a capital improvement is relevant in determining whether a particular expenditure upon an improvement to real property is either an ordinary repair or a capital improvement. That said, the more closely an expenditure approaches a total replacement cost of an improvement to real property, then the greater the likelihood becomes that that expenditure may be a capital improvement instead of an ordinary repair.
