Replacement Property

AAA

DEFINITION of 'Replacement Property'

Any property that is received as a replacement for property that was lost as a result of an involuntary conversion, such as theft. Replacement property can be either personal or business property and can include real estate, machinery and equipment, vehicles or personal equipment. Replacement property is often provided for by casualty-insurance carriers.

INVESTOPEDIA EXPLAINS 'Replacement Property'

The value of replacement property can sometimes exceed the value of the property that was lost. In this case, the taxpayer will realize a taxable gain on the difference between the excess value of the replacement property and the adjusted basis of the property that was lost. However, there are rules that allow for deferral of this gain provided certain conditions are met, and the gain can also be excluded if the property is the taxpayer's personal residence.

RELATED TERMS
  1. Requisitioned Property

    Property that is involuntarily seized by a governmental authority ...
  2. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
  3. Replacement Cost

    The cost to replace the assets of a company or a property of ...
  4. Casualty Insurance

    A broad category of coverage against loss of property, damage ...
  5. Disaster Loss

    A special type of tax-deductible loss, similar to a casualty ...
  6. Involuntary Conversion

    A process where a taxpayer is involuntarily forced to dispose ...
Related Articles
  1. Deducting Disaster: Casualty And Theft ...
    Taxes

    Deducting Disaster: Casualty And Theft ...

  2. Tax Relief For Katrina Victims
    Retirement

    Tax Relief For Katrina Victims

  3. Do You Need Casualty Insurance?
    Insurance

    Do You Need Casualty Insurance?

  4. What are unrealized gains and losses?
    Investing

    What are unrealized gains and losses?

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center