Introduction Basis is the amount of your investment in property for taxpurposes. Use the basis of property to figure the amount of gain orloss on the sale, exchange, or other disposition of property. Also useit to figure the deduction for depreciation, amortization, depletion,and casualty losses. If you use property for both business andpersonal purposes, you must allocate the basis based on the use. Onlythe basis allocated to the business use of the property can bedepreciated. Your original basis in property is adjusted (increased ordecreased) by certain events. If you make improvements to theproperty, increase your basis. If you take deductions for depreciationor casualty losses, reduce your basis. Files: It is important to keep an accurate record of your basis. Forinformation on keeping records, see chapter 1. cheap hotels in KalmarGenerally, the higher your basis for an asset, the less gain youwill have to report on its sale. The higher your basis in adepreciable asset, the higher your depreciation deductions.