Cost Basis

The original purchase price of a property plus any capital improvements, minus accumulated depreciation. Your cost basis determines how much capital gains tax you owe when you sell. If you bought for $150,000, added $20,000 in improvements, and took $30,000 in depreciation, your cost basis is $140,000. Sell for $200,000 and your taxable gain is $60,000, not $50,000.