What Does Basis Mean In Estate Planning?
What a person has paid for an asset and sometimes money invested in an asset after purchase (Example: what you paid for your house plus what you paid to update the kitchen). This determines gain/loss for income tax purposes.
Example Of Basis In Regards To Estate Planning
You purchased your house for $100,000, but have since had to put on a new roof for $3,000, you added on a garage for $10,000, and updated the windows for $4,000. Your new basis in your house is now $117,000 ($100,000 + $3,000 + $10,000 + $4,000).