If you sell a residential rental property you have owend since 1990 is section 1250 recapture figured on all depreciation or just depreciation claimed since May 7, 1997?
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I don't believe there is any 1250 recapture for real property after 1986Originally posted by Kram BergGold View Post
since such property is depreciated straight line. Might want to look
into this further. -
The 25% CG Rate Cap applies to all Unrecaptured 1250 Gain regardless of when the depreciation occurred.Comment
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home office
You may be thinking of the rules for selling your primary residence with a home office - in that case if one qualifies to exclude gain on the home, one cannot exclude depreciation allowed after May 7, 1997 from gain, and it is treated as sec 1250 unrecaptured gain, subject to the 25% capital gains rate.Comment
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The term is unrecaptured section 1250 gain
From TTB, page 6-8:
That means it does not matter when the property was purchased. Any gain on real property that is due to depreciation is subject to the 25% rate, except for any portion of gain due to depreciation that is subject to ordinary income rates.Unrecaptured Section 1250 gain is the part of any long-term capital
gain on Section 1250 property (real property) that is due to depreciation.
Unrecaptured Section 1250 gain cannot be more than
the net Section 1231 gain or include any gain otherwise treated
as ordinary income.
Basically, all gain due to straight line depreciation on real property is going to be unrecaptured section 1250 gain. Any property placed in service after 1986 is always going to be depreciated straight line under MACRS. If the property was placed in service before 1987, there is a possibility that accelerated ACRS was used, in which case some or all of the depreciation would be recaptured as ordinary income. That portion would not be unrecaptured section 1250 gain.Comment
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