Adjusted Tax Basis

Also called, adjusted cost basis, this is the net book value of a property, on which a capital gain or loss is based. This calculation begins with the basis (original purchase price), to which capital improvements made since the purchase and buying expenses are added; any depreciation taken for tax-related deductions is then subtracted from that amount to arrive at the adjusted tax basis. When the property is sold, the capital gains tax is calculated as the new sales price minus the tax basis. For more information, see the "All About Capital Gains" article in the "Real Estate Investing" section.

What You Need to Know About Real Estate

What You Need to Know About Real Estate

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