What is an expense called that is paid to improve a property?

A capital expense refers to a significant investment made to improve or enhance a property rather than simply maintaining it. These improvements typically extend the life of the asset, increase its overall value, or adapt it for new uses. Examples of capital expenses include renovations, major repairs, or upgrades that improve the structural integrity or functionality of the property.

In contrast, other types of expenses, such as operating expenses, cover the regular costs of running a property, like utilities and routine maintenance, while incremental expenses often refer to costs associated with a specific change in operations or scope and are not focused on property improvements. Renovation costs, while similar to capital expenses, may not encompass the broader definition and can apply to both minor and major updates. Thus, identifying capital expense as the correct answer reflects a clear understanding of property financial management principles.