Section 1250

AAA

DEFINITION of 'Section 1250'

A section of the United States Internal Revenue Service Code stating that a gain from selling real property that has been depreciated should be treated as ordinary income. Section 1250 bases the amount of tax due on the type of property owned (e.g., section 8 housing, rehabilitated properties) and how many months the property was owned for.

INVESTOPEDIA EXPLAINS 'Section 1250'

For example, if an investor purchased a property and it depreciated from its original purchase price of $100,000 down to $70,000 over several years of ownership and then sold the property for $110,000, the taxable gain is $40,000, not $10,000. If the property is disposed of as a gift, transferred at death, sold as part of a like-kind exchange or disposed of through other methods, no possible taxable gain exists.

RELATED TERMS
  1. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax ...
  2. Accelerated Cost Recovery System ...

    A system of depreciation introduced by the Economic Recovery ...
  3. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
  4. Assessed Value

    The dollar value assigned to a property for purposes of measuring ...
  5. General Depreciation System - GDS

    The most commonly used modified accelerated cost recovery system ...
  6. Salvage Value

    The estimated value that an asset will realize upon its sale ...
Related Articles
  1. An Introduction To Depreciation
    Active Trading

    An Introduction To Depreciation

  2. Capital Gains Tax 101
    Taxes

    Capital Gains Tax 101

  3. Work For The Government? Top Retirement ...
    Retirement

    Work For The Government? Top Retirement ...

  4. Don't Pick The Wrong Type Of Retirement ...
    Retirement

    Don't Pick The Wrong Type Of Retirement ...

Hot Definitions
  1. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  2. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  3. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  4. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  5. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  6. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
Trading Center