Adjusted Basis (real estate)

From Wikinvestor

Adjusted Basis ( Adjusted Tax Basis ) refers to the original cost or other basis of property, reduced by depreciation deductions and increased by capital expenditures.

Example: Brad buys a lot for $100,000. He then erects a retail facility for $600,000, then depreciates the improvements for tax purposes at the rate of $15,000 per year. After three years his adjusted tax basis is $655,000 [$100,000 + $600,000 - (3 x $15,000)].