Cost basis
What you paid for a property plus certain purchase costs and improvements, minus depreciation taken. It is subtracted from the sale price to figure your taxable gain.
Also called: basis, adjusted basis, tax basis
Related terms
Tax on the profit from selling an asset, based on the sale price minus your cost basis. Many homeowners can exclude part of the gain on a primary residence they have lived in long enough.
A tax deduction that spreads the cost of a rental building, not the land, over its useful life, 27.5 years for residential rentals. Depreciation taken may be taxed when you sell.
A federal tax rule that lets an investor defer capital gains tax by selling an investment property and buying another under strict timelines and rules. Talk to a tax pro first.
Fees and charges paid at closing on top of the price, such as lender fees, title insurance, recording fees, taxes and prepaid items. Buyers often pay around 2% to 5% of the price; sellers pay their own set of costs.