I have sold three properties from my rental property portfolio this year. Why is one of the three showing as a Section 1250 property, while the others are 1245 properties from an unrecaptured depreciation perspective.

Forum|Forum|11 months ago
April 18, 2025
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PatriciaV

It depends on the type of rental property you sold. Section 1245 assets are depreciable personal property (furniture, equipment, etc.) or amortizable Section 197 intangibles; Section 1250 assets are real property, whether depreciable or not. Either one of these provisions may result in capital gains and/or ordinary income (including depreciation recapture).

Also note that Section 1250 applies to assets that are not and have never been Section 1245 property. If you converted a rental from personal use, this would cause the sale to be subject to Section 1245.

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