IRC § 1250 Depreciation Recapture
26 U.S.C. § 1250
Governs the federal income-tax treatment of gain on the disposition of depreciable real property attributable to depreciation. Under Section 1250, 'additional depreciation' (depreciation claimed in excess of straight-line) is recaptured and taxed as ordinary income; because most real property placed in service after 1986 must use straight-line depreciation, this ordinary recapture is often zero. The related 'unrecaptured Section 1250 gain' (gain attributable to allowable straight-line depreciation) is taxed at a maximum 25% rate under IRC § 1(h), not under Section 1250 itself. Together these rules determine the tax cost when a depreciated building is sold.
Who must comply
Other IRS regulations
Section 1031 Real Property Definition
26 CFR § 1.1031(a)-3
Deferred Like-Kind Exchange Rules
26 CFR § 1.1031(k)-1
Opportunity Zone Final Regulations
26 CFR §§ 1.1400Z2(a)-1 through 1.1400Z2(f)-1
IRC § 1031 Like-Kind Exchanges
26 U.S.C. § 1031
IRC § 1400Z-2 Opportunity Zones
26 U.S.C. § 1400Z-2
FIRPTA Withholding
26 U.S.C. § 1445; 26 CFR § 1.1445-1
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