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Browse our investment glossary and get clear on key 1031 exchange, tax, financial, and investment-related terms.

What is Basis? [Definition]

Basis 
A property’s “basis” is the amount of capital that the IRS considers an owner to have in the property. In most cases, the basis of a property is its purchase price or its fair market value at the time it was acquired or inherited. Basis is used to calculate depreciation and capital gains or losses. For example, if a property’s basis is $500,000 and it sells for $800,000, the capital gains is $300,000 ($800,000-$500,000 = $300,000).

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