If straight-line depreciation is used by an individual for real estate, no § 1250 recapture will be recognized if the property is sold at a gain.

Question

Quizplus · Accepted Answer

Under straight-line depreciation, the entire amount of gain up to the depreciation previously taken is taxed as unrecaptured Section 1250 gain, which is subject to a maximum 25% tax rate, rather than being recaptured as ordinary income. This is because straight-line depreciation is the method allowed for real estate and does not lead to § 1250 recapture, which typically applies to the excess depreciation over the straight-line method.

If Straight-Line Depreciation Is Used by an Individual for Real