Direct answer
What does Capital improvement mean?
A significant addition or replacement that extends useful life, increases value or adapts property to a new use, depending on the accounting and tax context.
Exam cue: Separate long-term capital work from ordinary recurring repairs and maintenance.
What does it look like in a question?
New York example
The owner replaces the entire roof rather than patching a small leak.
Common exam trap
What should you not confuse it with?
Cost alone does not decide whether work is a capital improvement.
Related property management terms
EvictionA legal process used to recover possession from a tenant under applicable grounds and court procedures.Management agreementA contract authorizing a property manager to perform stated services for an owner.Operating budgetA plan of expected property income and operating expenses for a future period.Preventive maintenancePlanned inspection and service intended to reduce breakdowns, hazards and more costly repairs.Reserve fundMoney set aside for future major repairs, replacements, emergencies or other planned property needs.Security depositMoney held to secure a tenant's performance under a lease and governed by the applicable lease and law.
Sources used2 references with section locators
The curriculum citation confirms exam scope. Definition and rule citations support the explanation itself. Links and locators were checked on August 26, 2026.
- Real Estate Salesperson 77-Hour CurriculumNew York State Department of StateSupports: Exam scopeSection: Subject 19, Property Management
- Real Estate License Law, March 2026New York State Department of StateSupports: DefinitionSection: Department of State reference glossary entry for Capital improvement
Keep learning
Put the term back into its full subject.
A definition helps with recall. The subject guide shows how the rule interacts with documents, scenarios, calculations and practice questions.