Without an accurate basis, you don’t know if you actually made money.
Don't just use the purchase price. According to IRS Publication 551 , you can increase your basis (reducing your taxable gain) by adding: 551 mp4
AI responses may include mistakes. For financial advice, consult a professional. Learn more Publication 551 (Rev. December 2025) - IRS Without an accurate basis, you don’t know if
Think of "Basis" as your financial origin story—it is the foundational number that tells the IRS how much you originally invested. 💡 Why 551 Matters (The "Wow" Factors) For financial advice, consult a professional
Did you renovate the kitchen? Build a fence? Those increase your basis. Settlement Costs: Fees paid during home purchases. Legal Fees: Costs to defend or perfect title. 📉 Reducing Your Basis (The IRS "Takeaway") Conversely, your basis goes down when you claim: Depreciation: If you rent out your property.