Which of the following is considered a capital expenditure?

A capital expenditure refers to a substantial investment in a property that extends its useful life or enhances its value. These expenditures are typically associated with long-term improvements that are not part of regular maintenance or operational expenses.

The replacement of an HVAC (Heating, Ventilation, and Air Conditioning) system constitutes a capital expenditure because it involves significant spending that results in the improvement or prolongation of the property's functionality. A new HVAC system enhances comfort and efficiency for occupants and can increase the property's overall value. Since it is not a routine maintenance item but rather a substantial improvement, it falls squarely within the category of capital expenditures.

In contrast, routine maintenance is generally considered an operational expense as it involves day-to-day upkeep without significantly changing the structure or long-term value of the property. Property taxes and insurance costs are also operational expenses related to the ownership of the property, not capital investments.