An unrecaptured 1250 gain is a gain addressed by Section 1250 of the U.S. Internal Revenue Code. This provision directs that previously recognized depreciation be recaptured as income when a gain is realized on the sale of depreciable real estate property.

Such gains are taxed at a maximum 25% tax rate, though the rate is less in some cases. The gains, and the taxes on them, are calculated on a worksheet within the instructions for Internal Revenue Service (IRS) Schedule D, reported on Schedule D, and carried through to the taxpayer’s 1040.