Upon the sale of property,a portion of the selling price equal to the basis in the property is considered a return of capital to the seller and is,therefore,not taxable.

Question

Quizplus · Accepted Answer

This is known as the adjusted basis of the property, and it represents the cost of the property plus any improvements made minus any depreciation taken. This portion of the selling price is not taxable and is considered a return of capital. The remaining portion of the selling price may be subject to capital gains tax.

Upon the Sale of Property,a Portion of the Selling Price