Replacement Property Law and Legal Definition
Replacement Property refers to personal or business property received as a replacement for property that was lost as a result of an involuntary conversion, such as theft. Replacement properties may include real estate, machinery and equipment, vehicles or personal equipment. Sometimes, the value of replacement property can be higher than the value of the lost property. In such cases, 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.