Definition: Adjusted basis is a property's tax basis after required increases and decreases, such as capital improvements and depreciation allowed or allowable.
Example
Starting basis of $200,000 plus $30,000 of qualifying improvements minus $20,000 of depreciation produces $210,000 adjusted basis in a simplified example.
Keep the distinction clear
Adjusted basis is not market value, equity, or the mortgage balance. The original basis can also depend on how the property was acquired, including gift or inheritance rules.
Related terms
Capital Gain · Recovery Period · Equity
Keep studying
Real Estate Capital Gains: Basis, Profit, and Home-Sale Exclusions
References: IRS Publication 551: basis of assets
Pronunciation (US): uh-JUS-tid BAY-sis (capitals show stress)
Pronunciation reference: Merriam-Webster
Comments
0 comments
Article is closed for comments.