1. What Is Adjusted Cost Base?

The Adjusted Cost Base (ACB) is the cost of a property adjusted for various capital expenditures and dispositions over time. It represents the total cost of acquiring and improving a property for tax purposes.

2. How Does The Calculator Work?

The calculator uses the ACB formula:

Where:

• \( Cost \) — Original purchase price of the property
• \( Additions \) — Capital improvements and additions made to the property
• \( Dispositions \) — Capital dispositions or returns of capital from the property

Explanation: The ACB calculation accounts for all capital expenditures that increase the property's value and subtracts any capital returns or dispositions.

3. Importance Of ACB Calculation

Details: Accurate ACB calculation is crucial for determining capital gains or losses when selling a property, ensuring proper tax reporting, and maximizing tax efficiency in real estate transactions.

4. Using The Calculator

Tips: Enter the original cost in dollars, all capital additions in dollars, and any capital dispositions in dollars. All values must be non-negative numbers.

5. Frequently Asked Questions (FAQ)

Q1: What qualifies as an addition to ACB?
A: Capital improvements like renovations, additions, legal fees for acquisition, and other costs that permanently enhance the property's value.

Q2: What are common dispositions?
A: Returns of capital, capital dividends, or amounts received that reduce the property's cost base over time.

Q3: Why is ACB important for taxes?
A: ACB determines the capital gain or loss when you sell the property, which affects your tax liability.

Q4: How often should ACB be calculated?
A: ACB should be updated whenever there are capital additions or dispositions, and definitely before any property sale.

Q5: Are maintenance costs included in ACB?
A: No, routine maintenance and repairs are operating expenses, not capital additions that increase ACB.