A capital improvement is the purposeful addition of permanent structure or asset to a property to increase its market value in the future. Many homeowners look for bigger ventures and they can now achieve that by redefining their windows or installing solar panels or skylight. Bathroom and kitchen renovation contractors have also a slew of creative ideas that can largely benefit their bank accounts someday.
What Counts as a Capital Improvement?
The IRS mainly defines capital improvement as having the intention to fix a defect or design flaw, and become a permanent part of the property so that the removal would cause damage to the property.
For example, if a homeowner revamps the master bedroom and adds a bathroom with sleek industrial-style influences, that would be considered as capital improvements to the home. Kitchen contractors can also elevate your kitchen with better countertop, sink and faucet materials.
On the other hand, if an owner renovates an old building and considers the 32 inches minimum width of doors and entryways to comply with the Americans with Disability Act (ADA), that would be considered as a business-based capital improvement.
What Are the Benefits of Capital Improvements?
Yes, owners can reap the benefits of improved living conditions every single day, but that is simply not all. Per the IRS, capital improvement also increases the cost basis of a structure. Meaning, the amount of improvements is added to the original amount paid for the property. In turn, capital gain tax is reduced.
Thinking of adding significant value to your home or business? Going with Envy Home Services, one of Chicagoland’s leading sunroom and kitchen remodeling companies, is the best choice you can make. We make sure to treat your property like it’s ours!
Call us at (847) 463 1815 or fill out this contact form and we’ll set up a meeting with you at your home or business for a free, no-obligation consultation.