Priortax 9.0 10 1669 877-289-7580 File your current 2018 and prior year federal and state returns going back through 2005 Priortax Logo $ 10 Terrace Ave 11001 Floral Park, New York,

What is Basis?

The basis of a piece of property is usually the cost at which you bought it. This can include the amount you paid in cash, debt obligations, other property, and services, as well as sales tax, freight, installation and testing, excise tax, legal and accounting fees, revenue stamps, recording fees, and real estate taxes. You may also have to capitalize certain other costs related to buying or producing the property.

Basis can be reduced to account for depreciation, however. This new basis is referred to as adjusted tax basis and is used to determine gain or loss from buying or selling the asset.

Whenever property is sold, you have to pay taxes on the capital gain, which equals the amount you received in the sale minus the property’s basis. If you suffered a capital loss, you can deduct the difference between the amount received and the basis.