adjusted tax basis

Dictionary of Real Estate Terms for: adjusted tax basis
adjusted tax basis

the original cost or other basis of property, reduced by depreciation deductions and increased by capital expenditures.

Example: Collins buys a lot for $100,000. She erects a retail facility for $600,000, then depreciates the improvements for tax purposes at the rate of $15,000 per year. After 3 years her adjusted tax basis is $655,000 [$100,000 + $600,000 – (3 × $15,000)].

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