In real estate, this is generally the original cost of property (the original tax basis) less any depreciation deductions plus any capital expenditures. The adjusted tax basis is important when determining final taxes (and tax rates) upon the sale of a property. Example: Charles buys a lot for $100,000. He erects a retail facility for $600,000, then depreciates (for tax purposes) the improvements at the rate of $15,000 per year. After 3 years his adjusted tax basis is $655,000 ($100,000 + $600,000 - (3 x $15,000)).