Direct answer
What does Basis mean?
A tax measurement used to determine gain, loss, depreciation and other tax consequences for property.
Exam cue: Cost is a common starting point, but acquisition method and tax rules can change the initial basis.
What does it look like in a question?
New York example
A buyer begins with purchase cost and adds qualifying acquisition or capital costs under tax rules.
Common exam trap
What should you not confuse it with?
Basis is not the same as market value, mortgage balance or assessed value.
Related income tax terms
Adjusted basisOriginal basis increased or decreased by tax-law adjustments such as qualifying improvements and allowed depreciation.Amount realizedThe total value received on a disposition, adjusted for selling expenses and other items as tax law provides.Capital gainGain from the sale or exchange of a capital asset, calculated under tax law and subject to classification and exclusions.Depreciation recaptureTax treatment that can recharacterize or specially tax part of gain tied to prior depreciation deductions.Like-kind exchangeA tax-deferred exchange under Internal Revenue Code section 1031 for qualifying real property held for investment or productive use in a trade or business.Principal residenceA person's main home for tax purposes, determined from use and the applicable facts and rules.
Sources used2 references with section locators
The curriculum citation confirms exam scope. Definition and rule citations support the explanation itself. Links and locators were checked on August 26, 2026.
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