section 1250<\/u><\/a>, have the umbrella of Section 1231 and the tax rate of depreciation recapture is determined by Section 1250.\u00a0<\/p>Section 1250 associates only to real property, like the buildings and land. Under section 1245 the personal property, like machinery and equipment, is subject to depreciation recapture as ordinary income.<\/p>
When there is a net Section 1231 gain only then the unrecaptured section 1250 gains are realized.\u00a0<\/p>
As the capital losses on all depreciable assets counterbalance unrecaptured section 1250 gains on real estate, the unrecaptured section 1250 gain is reduced to zero by a net capital overall loss.<\/p>
Upon the sale of depreciated real estate the section 1250 gain is recaptured, similar to any other asset; with the only difference in the rate of it being taxed. The reason for the gain is to neutralize the benefit of previously used depreciation allowances.\u00a0<\/p>
While the gains assigned to collected depreciation are taxed at the section 1250 recapture tax rate, the balance gains are only subject to the long-term capital gains rate of 15%.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t