Finance category

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Cost Basis Calculator

Build the adjusted cost basis used to compute capital gains on a property sale: purchase price + closing costs + capital improvements − depreciation − casualty losses.

Original purchase price

Closing costs at purchase

title, recording, transfer tax

Capital improvements during ownership

additions, renovations, new mechanicals

Depreciation taken (rental periods)

Casualty loss deductions taken

Adjusted cost basis

$377,500

used in capital gain calculation

Original basis

$339,500

purchase + closing costs

Basis additions

+$38,000

capital improvements

Basis reductions

−$0

depreciation + casualty losses

What counts as a capital improvement

Anything that adds to the property's value or extends its useful life: additions, renovations, new HVAC, new roof, new water heater, new flooring, energy upgrades. Repairs and maintenance (painting, fixing leaks, replacing broken fixtures) don't add to basis.

Keep receipts and photos for every capital improvement. The IRS expects you to substantiate basis when you sell. Lost records mean lost basis, which translates directly into more capital gain and more tax.

Editorial noteMaintained by EveryCalc - Reviewed June 2026

EveryCalc calculators are designed for fast, practical estimates with transparent inputs and no required account. We use plain formulas, visible assumptions, and related tools so visitors can check the result from more than one angle.

Results are informational only. For financial, tax, legal, medical, construction, or other high-impact decisions, verify the output against primary sources or a qualified professional.

Learn more about our review process on the EveryCalc methodology page.

How this calculator works

What this page estimates

This Cost Basis Calculator is built to give a quick, browser-based estimate for cost basis. Build the adjusted cost basis used to compute capital gains on a property sale: purchase price + closing costs + capital improvements − depreciation − casualty losses. The inputs stay on the page during normal use, and the result should be treated as an estimate for planning, comparison, or education rather than professional advice.

Calculation approach

The calculator applies the standard relationship implied by the inputs, then formats the answer so it can be checked and reused. For finance tools, the most important step is using consistent units, rates, time periods, and assumptions before comparing the result with another calculator or outside quote.

Example workflow

For example, start with a realistic value you already know, change one input at a time, and watch how the answer moves. That makes it easier to tell whether the result is being driven by the main amount, the rate, the time period, or a unit conversion.

Practical checks

Use current, real-world numbers when the result affects money, health, tax, or legal decisions.
Run a low, base, and high case when the inputs are estimates.
Check the related calculators below when the next decision depends on a different assumption.

How to interpret the cost basis result

Best use

Use the result as a planning number for comparing payments, rates, returns, tax reserves, or cash-flow choices before you request a quote or make a commitment.

Cross-check

Compare the answer with the contract, lender estimate, tax form, brokerage statement, payroll record, or invoice that will control the real-world outcome.

Watch for

Do not rely on a single optimistic rate, return, or fee assumption. Money pages work best when you run low, base, and high cases and keep professional advice separate from the estimate.

This page belongs to the Finance calculator library, so the answer should be read in the context of the decision you are modeling rather than as a universal rule.

Before relying on this cost basis estimate

Most calculator mistakes come from the inputs, not the arithmetic. Use this short audit before you reuse the answer in a spreadsheet, quote, application, or important conversation.

Confirm source numbers

Match balances, rates, fees, taxes, income, and payment dates against the lender quote, payroll record, tax form, statement, invoice, or contract.

Separate cash flow from total cost

A lower monthly payment can still cost more over time if fees, interest, taxes, or a longer term are hidden in the structure.

Run conservative cases

Test at least one higher-cost or lower-return case before using the output for a purchase, refinance, investment, loan, or tax decision.

Rerun this page when the rate, price, term, fee, tax rule, income, expense, or expected holding period changes.

How to Use

Enter the original purchase price.
Enter purchase-side closing costs (title, recording, transfer tax — anything that's not refundable like prepaid insurance).
Add up capital improvements made over your ownership.
If the property was a rental for any period, enter total depreciation taken.
Add any casualty loss deductions you previously claimed.
Read the adjusted basis — feed it into capital gains calculations.

Frequently Asked Questions

What's a capital improvement vs a repair?

Capital improvement: adds value or extends useful life (additions, renovations, new HVAC, new roof). Repair: maintains current condition (paint, fixing a leak, replacing a broken outlet). Improvements add to basis; repairs are deducted as operating expenses if rental.

Why does depreciation reduce basis?

Depreciation deductions during a rental period reduce taxable income each year. The IRS recovers that benefit at sale by reducing your basis — which increases your gain. The recovered portion is taxed at up to 25% as depreciation recapture.

What if I inherited the property?

Stepped-up basis: the new basis is generally fair market value on the date of death of the prior owner. This effectively erases pre-inheritance gain. Special rules apply for community property states and joint ownership.

Do I need receipts for everything?

Yes — the IRS expects substantiation. Keep receipts, contracts, and bank records for every capital improvement. Photos, MLS history, and permit records help corroborate. No documentation = no basis adjustment in an audit.