Computing a property’s adjusted basis is not limited to decreases due to depreciation, amortization, and depletion. A property’s basis may also have to be increased or decreased by certain items depending on the type of property and its history. Below is a list of possible increases and decreases that affect a property’s basis, per IRS Publication 551:
Increases to Basis:
- 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.
- The capitalized value of a redeemable ground rent.
Decreases to Basis:
- Section 179 deduction.
- Nontaxable corporate distributions.
- Deductions previously allowed (or allowable) for amortization, depreciation, and depletion.
- Exclusion of subsidies for energy conservation measures.
- Vehicle credits.
- Residential energy credits.
- Postponed gain from sale of home.
- Investment credit (part or all) taken.
- Casualty and theft losses and insurance reimbursements.
- Certain canceled debt excluded from income.
- Rebates from a manufacturer or seller.
- Gas-guzzler tax.
- Adoption tax benefits.
- Credit for employer-provided child care.