Adjusted Basis

Definition

The original purchase price plus improvements minus depreciation, used to calculate capital gains taxes. The IRS's favorite way to follow your every real estate move.

Example Usage

Our adjusted basis is $400,000 after including the kitchen renovation, which affects our capital gains calculation.

Origin

Tax accounting terminology combining 'adjustable' and 'basis' (starting point)

Fun Fact

Keeping documentation of home improvements is crucial; the IRS requires proof

Source: Real estate taxation terminology

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appraised

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base rent

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option

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