Maybe a definition of capital and expense would help.
An expenditure for something would be capitalized if it adds
to the value or to the expected life of the property.
An expenditure for something would be expensed if it merely
restores the value or the expected life of the property.
An example might be replacing the flooring in a bathroom.
If you are replacing a linoleum floor with new linoleum, you
are restoring the value or expected life. On the other
hand, if you replaced the linoleum with ceramic tile, you
are adding to the value and extending the life. Linoleum
would be a replacement, ceramic tile would be an
improvement.
This makes sense, but I would like to take it a bit further.
I have a vacation rental home, and I understand the rules
about painting vs. adding a room, etc., but what about
furniture? When we bought the house, we spend about $20,000
on furniture and then began to depreciate it. Subsequently,
however, we sometimes buy additional furniture (a $900 desk,
an $85 TV cabinet, a $1200 painting, etc.). These pieces
don't add anything to the value of the house (unless it is
sold turnkey, which is common in Hawaii, where the house
is), but does it mean that overtime we buy something new we
need to start a new depreciation schedule? The paperwork
could be daunting, especially since (for the three examples
above) they were all bought in different years. Or maybe
they should be considered personal property (I might take
the painting if I sold the house, but I might also leave it)
and not subjected to any kind of tax treatment.