Every repair and renovation you invest in is meant to restore or enhance your property. That said, some renovations are more significant and enduring than others. Certain projects that transform your property in meaningful ways are deemed capital improvements. U.S. tax law classifies a renovation as a capital improvement if it:
- Adds significant value to the real property (or extends the real property’s useful life)
- Becomes a permanent part of the real property (i.e., would damage the property if removed)
- Is intended to become a permanent feature
If all three parameters are met, the property owner must claim the project as a capital improvement for tax purposes. Basic repairs and maintenance projects are important for keeping your property stable and appealing, but they don’t fit the bill for capital improvement – so, what does? Let’s list some asphalt paving projects you might include in your next capital improvement project.
Asphalt Paving Projects to Include in Your Capital Improvement Project
Expanding Your Parking Lot or Driveway(s)
As your business grows, your physical space might need to follow suit. Adding onto your existing asphalt will help accommodate more employees and customers, providing more space to drive, park, and navigate the premises on foot. Depending on how much square footage you plan on adding, this commercial paving project may constitute a capital improvement. After all, a more spacious parking lot will add value to your property and is meant to stick around for a long time.
Installing New Sections of Pavement
Perhaps you plan on keeping your existing parking lot and driveways as they are but you also want to pave other surfaces for different purposes. Parks, for instance, might include asphalt sections for outdoor sports and games (e.g., basketball, catch, four square). If you plan on adding park driveways and paving new, isolated sections such as these, this investment might be significant enough to be considered a capital improvement.
Replacing Drainage Systems
Asphalt services go beyond just paving, patching, and overlaying. If a paved surface is in serious disrepair, an asphalt paving company might need to dig deep to inspect and resolve underlying issues. In many cases, damaged or outdated drainage systems need replacing. Because a job like this is a major and costly undertaking, it might count as a capital improvement. A new drainage system will greatly extend the asphalt’s lifespan and is meant to endure for decades with proper maintenance.
Curb and Berm Installation
Speaking of drainage, curbs and berms are in part meant to facilitate proper drainage by directing the flow of water when it rains. These features also promote pedestrian and motor vehicle safety by acting as barriers that separate different parts of a parking lot, driveway, or road. As such curb and berm installation is often an important aspect of park paving projects. If this project is large enough in scope, it might even be considered a capital improvement since it may meet the three requirements described earlier: value-adding, permanent, and intended to become a permanent feature.
Asphalt Paving Capital Improvements
While most asphalt renovations don’t constitute capital improvements, the ones mentioned here sometimes make the cut, especially when combined with other capital improvement efforts. At Cassidy Paving, we’re well-versed in what does and doesn’t go into capital improvement projects, and we’ve helped many of our clients across New England add significant, permanent value to their properties with our range of asphalt offerings.
Call us today at 866-978-9788 for a free estimate on your next paving project.