A section of the IRS
tax code indicating that any depreciable property that is sold
for more than the depreciated value
qualifies for capital gains taxation
rather than income taxation
. Equally importantly, Section 1245 qualifies this type of property for favorable capital gains treatment: sellers pay less in capital gain tax than they otherwise would on this property. Section 1245 applies to real
, personal, and intangible
property so long as it can be depreciated and amortized
. See also: Accounting
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
Section 1245 (26 U.S.C. §1245)
The Internal Revenue Code section that establishes rules regarding gains and losses on certain depreciable property,including real property.It is important because it contains definitions for something called “Section 1245 property.”This,in turn,is important in other tax laws defining benefits available for Section 1245 property. To find the law's text, see the instructions at Section (federal code).
The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
When depreciable personal property is sold, gain must be recaptured as ordinary income up to the amount of depreciation claimed. Section 1245 is the Internal Revenue Code section that requires this treatment. Also see "Recapture of Depreciation."
Copyright © 2008 H&R Block. All Rights Reserved. Reproduced with permission from H&R Block Glossary