In real estate, what term refers to the financial interest attributed to an owner by the IRS for depreciation purposes?

The term that refers to the financial interest attributed to an owner by the IRS for depreciation purposes is "Basis." In real estate, the basis of a property is essentially the owner's investment in the property that can be used to calculate depreciation, as well as gain or loss for tax purposes when the property is sold. The basis typically includes the purchase price, plus any costs associated with acquiring the property, such as closing costs and significant improvements made to the property over time.

Understanding the concept of basis is crucial for real estate investors, as it directly impacts their taxable income. When the property is depreciated, the IRS allows owners to deduct a portion of the basis each year, reducing taxable income. This concept is fundamental in tax planning and financial reporting for real estate ownership and transactions.