Cost Basis for Domains
Cost basis, for a domain, is the total amount invested in it: the acquisition price plus every renewal fee and transaction cost paid to acquire and hold the name. It is the number profit is measured against — a $2,000 sale of a name hand-registered years ago and renewed annually is a very different outcome than the same sale of a name bought last month for $1,800.
What goes into a domain's cost basis
- •Acquisition: registration fee, auction price, or purchase price, plus escrow or marketplace buyer fees.
- •Renewals: every annual renewal paid while holding — the component that quietly grows each year.
- •Transaction costs: transfer fees and, at sale time, commissions that reduce net proceeds.
Why tracking it changes decisions
Cost basis converts gut feelings into arithmetic. A name renewed for eight years at typical fees has a basis approaching a hundred dollars even if it was hand-registered — so a $99 closeout sale of it is roughly breakeven, not profit. Portfolio-wide, basis is what makes renew-or-drop decisions and true P&L possible, and it is the record tax reporting relies on. This is bookkeeping most spreadsheets start and then abandon; portfolio tools like Sourdough track cost basis and P&L per domain automatically as you log acquisitions and renewals, with a 7-day free trial.
Know exactly what your portfolio earns
Sourdough tracks cost basis, renewal spend, and sale proceeds per domain — real P&L and ROI for your whole portfolio, not a spreadsheet guess. 7 days free, then $10/mo. $0 due today.
Frequently Asked Questions
Do renewal fees count toward cost basis?
For investment decision-making, yes — renewals are real cash invested in holding the name, and ignoring them overstates profit. How renewals are treated for tax purposes varies by jurisdiction and situation; that is a question for a tax professional.
What is the difference between cost basis and appraised value?
Cost basis is what you have actually spent; appraised value is an estimate of what the name might sell for. Profit only exists when a sale price exceeds basis — appraisals do not pay renewals.