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:
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.
- The capitalized value of a redeemable ground rent.
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 reimbursements.
- Certain canceled debt excluded from income.
- Rebates treated as adjustments to the sales price.
- Gas-guzzler tax.
- Adoption tax benefits.
- Credit for employer-provided child care.
- Partial disposition of MACRS property, whether you elect to recognize the partial disposition or are required to recognize it.
Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.