Which type of property falls under Section 1250?

Section 1250 of the Internal Revenue Code pertains specifically to real property that has depreciated. This section addresses how gains from the sale of depreciable real property are treated for tax purposes, emphasizing that real estate used in a trade or business or held for the production of income is eligible.

When real property is sold, and it has been subject to depreciation, the tax treatment is different compared to other types of property, including personal property or intangible assets. The gains recognized upon the sale may be subject to a portion of the gain being treated as ordinary income due to depreciation recapture, thus impacting how much tax eventually must be paid on that gain.

This designation helps taxpayers understand the tax consequences of disposing of real estate compared to other asset types, reinforcing the tax code's focus on different asset classes and their associated rules.