It's still an asset. Generally, modifications do add value in the car world, its definitely a niche market. A jacked up truck with 6" body lift, 6" suspension lift and 43" tires has more value than a standard truck. Installing a turbo on an older car or modifying a 53 Ford so it can handle AC and a stereo would all be value added modifications.
Modifications are not typical maintenance. They do add somewhat to the value of your vehicle.
Also, don't forget if you have a loss 3 out of 5 years and you are trying to claim it as a business, the IRS can change it back to a Hobby.
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