Tax Basis Adjustments
Your Adjusted Tax Basis determines the taxable gain at sale, recapture exposure, and capital deployment efficiency. Track it through every year of ownership.
Why do real estate investors care about Tax Basis Adjustments?
Because your Adjusted Tax Basis is the foundation for calculating your ultimate tax liability upon sale.
It is a dynamic figure that tracks your investment’s cost history, accounting for every dollar of capital invested and every dollar of value recovered through depreciation. Understanding how to track these adjustments is essential for determining your true gain and navigating the complexities of capital gains tax.
Calculator · Tax Basis Adjustments
Basis computation
Build up your total cost basis, subtract accumulated depreciation, and calculate the current adjusted tax basis.
Acquisition
$
Closing Costs
$
$
$
$
Capital Improvements
$
$
$
Land & Depreciation Schedule
$
Land is not depreciable. Enter your appraised or allocated land value.
yrs
yrs
Accumulated depreciation caps at depreciable basis if years exceed recovery period.
Results · Live
Adjusted Tax Basis
Adjusted Tax Basis = Total Cost Basis − Accumulated Depreciation.
Awaiting your figures
Fill in the inputs on the left, then hit Calculate Tax Basis.
Adjusted Tax Basis
$0
of — total cost basis · —
Basis Status · Basis Percentage
Mature <60%
60%–85%
Early >85%
—
—
Cost Basis Composition
Adjusted Basis
—
Accumulated Dep.
—
Total Cost Basis
—
Basis Percentage
—
Accumulated Depreciation
—
Basis Allocation · Land vs Depreciable vs Used Depreciation
Year 1
0%
Mid Hold
0%
Current
0%
Total Cost Basis
—
Depreciable Basis
—
Annual Depreciation
—
Accumulated Depreciation
—
Adjusted Tax Basis
—
Basis Percentage
—
—
Depreciation Recapture Watch
Monitor accumulated depreciation and adjusted basis to estimate recapture risk before disposition.
Tax Basis Adjustments Example & Formula
Track cost basis build-up, depreciation usage, and adjusted basis remaining through ownership using a professional CRE tax-basis workflow.
Adjusted Tax Basis = Total Cost Basis − Accumulated Depreciation
Closing Costs = Legal Fees + Appraisal & Inspection + Transfer Taxes & Recording + Title Insurance
Beginning Basis = Purchase Price + Closing Costs
Capital Improvements = Structural Renovations + Tenant Improvements + Site Enhancements
Total Cost Basis = Beginning Basis + Capital Improvements
Depreciable Basis = Total Cost Basis − Land Value
Annual Depreciation = Depreciable Basis ÷ Recovery Period
Accumulated Depreciation = Annual Depreciation × Years Owned
Basis Percentage = (Adjusted Tax Basis ÷ Total Cost Basis) × 100
Step 1 · Closing Costs
Legal Fees + Appraisal & Inspection + Transfer Taxes & Recording + Title Insurance
$150,000
Step 2 · Beginning Basis
Purchase Price + Closing Costs
$2,650,000
Step 3 · Capital Improvements
Structural Renovations + Tenant Improvements + Site Enhancements
$200,000
Step 4 · Total Cost Basis
Beginning Basis + Capital Improvements
$2,850,000
Step 5 · Depreciable Basis
Total Cost Basis − Land Value
$2,300,000
Step 6 · Annual Depreciation
Depreciable Basis ÷ Recovery Period (39 yrs)
$58,974
Step 7 · Accumulated Depreciation
Annual Depreciation × Years Owned (5 yrs)
$294,870
Step 8 · Adjusted Tax Basis
Total Cost Basis − Accumulated Depreciation
$2,555,130
Final Result
Adjusted Tax Basis = $2,555,130
The Adjusted Tax Basis represents the remaining tax basis after accounting for depreciation deductions claimed during ownership. This figure is critical for calculating capital gains tax and depreciation recapture upon sale.
© Annie Scott Realty Group LLC
Estimates only · not tax advice
