What is a Section 1250 property?

Section 1250 generally applies to real property (such as commercial buildings and rental houses) and real property structural components (such as roofs and flooring) that are depreciated over longer periods of time than section 1245 property.

What is the difference between Section 1245 and Section 1250 property?

Examples of Section 1245 property, such as furniture and business equipment, contrast with Section 1250 property, as these are not typically fixtures of a building. On the flip side, the stuff that stays put, like the building itself and its integral parts, falls squarely under the umbrella of 1250.

What is an unrecaptured Section 1250 Gain?

Unrecaptured depreciation applies only to real property, which is land and buildings. Personal property such as equipment and machinery does not apply and is subject to ordinary depreciation recapture rates under Section 1245. As an example of how an unrecaptured section 1250 gain works, let’s say an investor acquires a property for $200,000.