Is the cost basis on rental property reduced by the amount of depreciation for the tax year or for every year the property was owned?

[PaulaM · Accepted solution]

Cost basis would be adjusted for the accumulated depreciation taken. Assuming you are calculating the adjusted basis for a sale of the property, the calculation goes like this:

Purchase Price - accumulated depreciation + Improvements= Adjusted basis. See link below for example.

https://www.sapling.com/7729363/calculate-basis-sale-rental-property