Adjusted Cost Basis refers to the adjusted cost or tax basis of a property that is being sold or exchanged. The adjusted cost basis is the original cost or purchase price of the property plus any capital improvements, such as renovations or additions, made to the property over time, minus any depreciation taken on the property since its acquisition.

The adjusted cost basis is a critical factor in determining the tax liability and potential capital gains of a property. By properly calculating the adjusted cost basis, investors can accurately determine their tax liability when selling or exchanging a property and ensure they are complying with the 1031 exchange regulations. It is important to work with a tax professional or qualified intermediary to accurately calculate the adjusted cost basis and navigate the 1031 exchange process.