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Capital Expenditure (CapEx)
Long-term investment funds used to improve, replace, or add major physical property assets that are capitalized rather than expensed immediately.
Capital Expenditure (CapEx) refers to funds invested by a property owner to acquire, upgrade, or substantially extend the useful physical life of a real estate asset. Unlike routine operational maintenance, CapEx items—such as roof replacements, HVAC unit installs, and parking lot repaving—are capitalized and depreciated over multiple tax years.
Frequently Asked Questions
What threshold distinguishes CapEx from routine maintenance repairs?
Under IRS guidelines and GAAP, items extending the useful life of an asset beyond one year or exceeding the property capitalization threshold (typically $2,500 to $5,000) are classified as CapEx.
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