Your adjusted basis is the money you put into it. Start with the initial purchase price in 2001. Include basis adjustments such as improvements. Basis can be increased or decreased.
Increases to Basis
Increase the basis of any property by all items properly added to a capital account. These include the cost of any improvements having a useful life of more than 1 year.
Rehabilitation expenses also increase basis. However, you must subtract any rehabilitation credit allowed for these expenses before you add them to your basis. If you have to recapture any of the credit, increase your basis by the recaptured amount.
If you make additions or improvements to business property, keep separate accounts for them. Also, you must depreciate the basis of each according to the depreciation rules that would apply to the underlying property if you had placed it in service at the same time you placed the addition or improvement in service. For more information, see Pub. 946.
The following items increase the basis of property.
- The cost of extending utility service lines to the property.
- Impact fees.
- Legal fees, such as the cost of defending and perfecting title.
- Legal fees for obtaining a decrease in an assessment levied against property to pay for local improvements.
- Zoning costs.
Decreases to Basis
The following are some items that reduce the basis of property.
- Section 179 deduction.
- Nontaxable corporate distributions.
- Deductions previously allowed (or allowable) for amortization, depreciation, and depletion.
- Exclusion of subsidies for energy conservation measures.
- Certain vehicle credits.
- Residential energy credits.
- Postponed gain from sale of home.
- Investment credit (part or all) taken.
- Casualty and theft losses and insurance reimbursement.
- Certain canceled debt excluded from income.
- Rebates treated as adjustments to the sales price.
- Easements.
https://www.irs.gov/publications/p551#en_US_201612_publink1000256908>
