This is something I don't understand...

[e_leong]

California


If someone owns a house "free and clear" and it is estimated to be worth about $1,000,000 and he plans to swap his house for another one, what is the property basis of the $1,000,000 house. Does he have one? Thanks.

 

[AlexandriaDumas]

"what is the property basis"

Could you be a little more clear? What is a "property basis?"

 

[LdiJ]

California


If someone owns a house "free and clear" and it is estimated to be worth about $1,000,000 and he plans to swap his house for another one, what is the property basis of the $1,000,000 house. Does he have one? Thanks.

His "basis" in the property is the price he paid for it, plus the cost of any improvements that he made. If he inherited the house, it would be the fair market value of the house at the time he inherited it, plus the cost of any improvements made.