Unrecaptured Section 1250 Gain Clause Samples

The Unrecaptured Section 1250 Gain clause defines the portion of gain from the sale of depreciable real property that is subject to a special tax rate under U.S. tax law. Specifically, it applies to gains attributable to depreciation deductions previously taken on real estate, such as commercial buildings or rental properties, which are taxed at a maximum rate of 25% rather than the lower capital gains rate. This clause ensures that taxpayers do not receive the full benefit of lower capital gains rates on amounts that were previously deducted as depreciation, thereby preventing a tax loophole and ensuring appropriate tax treatment of real estate transactions.