Section 1250


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.

BREAKING DOWN '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.

  1. Section 1231 Property

    A tax term relating to depreciable business property that has ...
  2. Accelerated Depreciation

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

    A system of depreciation introduced by the Economic Recovery ...
  4. Assessed Value

    The dollar value assigned to a property for purposes of measuring ...
  5. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
  6. Unrecaptured Section 1250 Gain

    A type of depreciation-recapture income that is realized on the ...
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