Section 1231 property is a type of property, defined by section 1231 of the U.S. Internal Revenue Code. Section 1231 property is real or depreciable business property held for more than one year.

A section 1231 gain from the sale of a property is taxed at the lower capital gains tax rate versus the rate for ordinary income. If the sold property was held for less than one year, the 1231 gain does not apply.

Examples of section 1231 properties include buildings, machinery, land, timber, and other natural resources, unharvested crops, cattle, livestock, and leaseholds that are at least one year old.