What is treated as the cost of improvements to land?

The costs associated with razing existing buildings are considered part of the cost of improvements to land because they are necessary to prepare the land for its intended use. When a property is acquired, existing structures may need to be demolished for various reasons, such as to build new facilities or repurpose the land for different functions. The expenses incurred during this process directly contribute to enhancing the value of the land itself.

In accounting, the costs that improve, enhance, or prepare land for its primary intended use capitalize onto the land's basis. This ensures that all expenditures that attach to the land enhance its use or value are recorded properly. Razing existing structures falls under this category, as it is a precondition to implementing future developments on the site.

On the other hand, deferred maintenance costs would not be capitalized as improvements; rather, they are expenses related to repairs that have been postponed. Regular maintenance of the land also does not qualify as an improvement but is a necessary upkeep expense meant to maintain the existing condition of the land. Landscaping costs may enhance the aesthetic appeal or utility of the property, but unless they significantly improve the land's value or functionality, they are usually considered routine expenses rather than part of the improvement costs.