PHILADELPHIA - Adjusting your basis in a rental property can lower the tax you owe when you sell it. For example, if you bought your rental property for $120,000, plus $3,000 for legal fees and $10,000 for capital improvements and financed it for ten years, and you built a fence on your neighbor's property, your basis will be reduced to $134,400. You'll pay $13,000 in taxes, not including additional taxes collected by the state.