Property Management
Under Massachusetts property management practice, a 'capital expenditure' budget differs from an 'operating expense' budget because capital expenditures:
AAre smaller amounts than operating expenses
BAre major improvements or replacements (roof, elevator, HVAC) with useful lives exceeding one year, not routine maintenance✓ Correct
CAre funded by tenant assessments only
DAre tax-deductible in the year spent
Explanation
Capital expenditures are major investments in long-term physical improvements or replacements (roof replacement, elevator, HVAC system) with useful lives of more than one year. Operating expenses cover routine maintenance and day-to-day costs.
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