Unrecaptured Section 1250 Gain

A type of depreciation-recapture income that is realized on the sale of depreciable real estate. Unrecaptured Section 1250 income is taxed at a 25% maximum capital-gains rate (or less in some cases). Unrecaptured Section 1250 gains are only realized when there is a net Section 1231 gain that is not subject to recapture as ordinary income.

A Section 1250 gain is recaptured upon the sale of depreciated real estate, just as with any other asset; the only difference is the rate at which it is taxed. Assets that do not qualify under Section 1250 are taxed at a different rate.

Unrecaptured Section 1250 gains and losses are not reported on Schedule D, but on worksheets within the Schedule D instructions, and are carried to the 1040.