Real Estate Investing Glossary
Cost basis
Cost basis is the starting figure used to measure gain or loss when a property is sold.
Cost basis is the starting figure used to measure gain or loss when a property is sold. It generally begins with the purchase price and is adjusted for items such as improvements and depreciation.
Why it matters to a Las Vegas investor
Basis affects how much gain is taxable when a Las Vegas rental is sold, so it pays to keep purchase and improvement records. A tax professional can confirm how it is calculated for you.
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Questions about Cost basis
Do improvements change basis?
Capital improvements generally increase it, while depreciation decreases it.
Why keep records?
Documents on purchase costs and improvements support the figure used at the time of sale.