Cost basis
The total amount invested in a property for tax purposes: purchase price plus certain closing costs and capital improvements. Used to figure capital gains when you sell.
Your Room opens on going under contract and closing, with the offer and everything before it already ticked.
Organize my saleFree to set up. Pay once when you list: $89 or $189. 7-day refund.
See how it worksWhere this comes up in a sale, and what follows
- Closing day (comes before)
Part 1 of 4
Why a seller cares
Cost basis is where the gain calculation starts: what you paid plus certain closing costs and every capital improvement. The higher it is, the smaller the taxable gain, and receipts are what hold it up.
Part 2 of 4
A simple example
You paid $180,000, spent $3,000 on closing costs that count, and added $30,000 of improvements. Your basis is $213,000.
| The piece | Counts toward basis? |
|---|---|
| The purchase price | Yes |
| Title fees and recording costs at purchase | Yes |
| Improvements with receipts | Yes |
| Mortgage interest and repairs | No |
Basis is purchase price plus what you added to the house, and the receipts are the proof.
Part 3 of 4
What people get wrong
That the mortgage has anything to do with it. Basis is about what the house cost, not how it was financed.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
In your Room, this word explains itself where it appears.
Your Room defines cost basis in the step you meet it in, beside the document or the date it belongs to. Free to set up, with an agent or on your own.
Organize my saleFree to set up. Pay once when you list: $89 or $189. 7-day refund.