Adjusted basis means the cost-basis for any asset that is adjusted for several events/parameters throughout its ownership cycle. It mostly helps in the calculation of capital losses/gains for the purposes of income tax, whenever any property is sold, or also for calculating the tax basis of any inheritor, whenever property is received from the estate of a testator.
Adjusted basis means any material change taking place for the documented initial security/asset cost, on the post-ownership basis. Updating the original cost of purchase is used for the computation of capital losses/gains for the purposes of taxation. This is an adjustment that will enhance cost-basis, while reducing the overall tax outgo as well.
This is vital in the real estate sector, enabling the calculation of capital gains/loss of any owner of a property for taxation purposes. It is usually done for income tax purposes, especially when any property is sold, or also for the calculation of the tax basis for any inheritor, upon getting property from the estate of the testator. Hence, the term has a role to play in the industry.
