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Canadian Financial, Real Estate and Mortgage Glossary

How often this word is used
50% - Moderately

Adjusted Basis

Synonyms:actual value, calculated, compute gain or loss
Filed Under: financial-banking, real-estate
Tags: banking, realty

Definition of adjusted basis

adjusted basis
1. Refers to the amount used to determine profit or loss from a sale or property trade. To calculate this amount for an asset, take the original amount paid, add improvement and assessment costs, and then subtract deductions. Deductions can include down grading, depreciation, or depletion.

Related Terms and Acronyms:

  • actual cash value (ACV)   The replacement cost of an insured asset with depreciation accounted for.
  • asset   Anything of monetary value that is owned by a person. Assets include real property, personal property, and enforceable claims against others including bank accounts, stocks, mutual funds, and so on.
  • basis   That on which a thing rests or is founded.
  • capital gain (CG)   The profit made by the seller when real estate or other capital assets are sold. Capital gains are taxed more favourably than earned income. However, this can be dependent on your tax bracket and the length of time you owned the asset before it was sold. You could pay approximately one-third to one-half less tax than you would pay on the same amount of earned salary.
  • capital loss   When an asset is sold for less than what you paid, or less than its adjusted basis, it is a capital loss. However, when it comes to taxes a capital loss is not always bad because you can use it to reduce the amount of income being taxed by the amount of the loss, up to $3,000 per year. If your loss is more significant, the excess (or capital loss carryover) can be carried forward indefinitely until the total loss is used.
  • depreciation   The gradual loss of value of a building or other property because of age or natural wear.
  • non-liquid asset   A possession that can't be transformed readily into cash. Stocks and bonds are liquid assets because they can be sold easily; a house is a non-liquid asset because it takes time to sell.

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