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.