Q:

What is Section 1250 property?

A:

Quick Answer

Section 1250 property is an Internal Revenue Service code stating that any gain from selling a depreciable property is ordinary income, rather than a capital gain. The amount of taxes homeowners pay as ordinary income depends on the type of property, such as section 8 housing or rehabilitated properties.

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Full Answer

The IRS often uses section 1250 of the tax code to make up for tax revenues lost on depreciating assets. Capital gains taxes are lower than ordinary income; therefore, the IRS uses section 1250 to recapture taxes due to depreciation. Any asset sold at a higher price than the depreciated value is a method the IRS uses to assess section 1250 properties.

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