Business Glossary

the section of the Internal Revenue Code dealing with gains from real estate on which accelerated depreciation had been claimed. Since 1986, straight-line depreciation is mandated for most buildings. Consequently, the importance of Section 1250 has been minimized. Under prior law, gains on residential property were generally treated as capital gains except to the extent of accelerated depreciation claimed (Figure 175 and Table 48). For depreciable real estate sold after July 29, 1997, long-term capital gain that would be treated as ordinary income if the property were depreciable personal property (Code Section 1245) is taxed at a maximum rate of 25%. The remaining amount of long-term capital gain is taxed at a maximum rate of 15% after May 6, 2003.