Cost of Improvement

Tax Glossary Definition

Cost of Improvement

The cost of improvement refers to any expenditure incurred to enhance the value of a capital asset after its acquisition. These costs are added to the original purchase price to calculate the total cost for computing capital gains, ensuring that only the net gain is taxed.

Example: Constructing a boundary wall for a building before its sale qualifies as a cost of improvement and can be included in the capital gains calculation.

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