Investment Property

 I have investment property. Can you explain the term “basis of assets”? 

Basis is your investment in property for tax purposes. Before you can figure any gain or loss on a sale, exchange, or other disposition of property, or figure allowable depreciation, you must determine the adjusted basis. Adjusted basis is the result of increasing or decreasing your original basis according to certain events. Your original basis is usually your cost to acquire the asset. Increases to basis include but are not limited to:

  • Improvements
  • Assessments for local improvements
  • Sales tax
  • The cost of extending utilities lines to the property
  • Legal fees such as the cost of defending or perfecting title
  • Zoning costs

Decreases to basis include but are not limited to:

  • Depreciation
  • Nontaxable corporate distributions
  • Casualty and theft losses
  • Easements
  • Rebates from the manufacturer or seller