Increase the Value of Your Real Estate Investment
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Increase the Value of Your Real Estate Investment

Learn the facts about real estate improvements to increase the worth of your asset. Real estate improvements fall into different categories and are treated differently when it comes to taxes.

Whether you purchase real estate for your own enjoyment, or as an investment, improvements to the real estate are generally considered an asset. Real estate is property that can’t be easily moved, such as land, or a building. Both, land and buildings can be improved upon to enhance their value.

Examples of land related improvement fall into a couple of categories, first, expenditures used to prepare land for its intended us, such as grading, filling, draining, cleaning, and removing old constructions. Remarkably, if you have shoreline property, the Environmental Land Improvements, Inc., established in 1995, will aid owners in erosion control, a sizeable asset when the alternative is attrition of your real estate. Primary expenditures also include roadways, bridges, drainage systems, ponds, wells, and water mains. All of these improvements must be approved by the local Town Planning Boards and other authorities. It is best to employ certified and bonded construction companies.

The secondary expenditures include added walkways, parking lots, irrigation systems, and landscaping. Improvements falling into the second category are usually recorded as separate assets on your accounting papers, and are deprecated over the period of the specific real estate ownership. Bear in mind, landscaping needs maintenance and will later be treated as an expense. In other words, maintenance of landscape will not be capitalized.

Buildings and houses can also be upgraded in order to add value to property. However, there is a distinction between simply replacing, restoring, or repairing the original condition of the real estate versus solid improvements such as a kitchen or bathroom overhaul.

The addition of new major appliances, fixed in the home or building will increase the value of the real estate. Examples are heating and cooling, windows, roofs, dishwashers, flooring, insulation, electric, and water piping. It is imperative that improvements meet the grade of a true upgrade. To merely replace a broken single-pane window with another, albeit unbroken, single-pane window is not an improvement, but a repair.

To replace the guts of a building is most likely considered as asset. Your local electrical and water companies will have the latest criteria for a qualified home improvement. Don’t be reluctant to call upon a consultant or inspector to point you in a positive direction for home improvements. Different materials are suitable for different environments and you want the correct materials that best improve your real estate.

Real estate improvements not only enhance the value of property but make for a better appearance in the community. They are also more inclined to be environmentally greener and more efficient.

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