Is there a common, colloquial term for "unrecaptured section 1250 gain" in I.R.C. Section 1(h)(6)?

That tax term is definitely a mouthful! In the tax world, we sometimes just call it "Section 1250 gain" or "1250 gain" for short, though that's still pretty technical. In plain English, it's basically the portion of your profit from selling rental property that comes from depreciation deductions you took while owning it. The IRS wants to "recapture" some of the tax benefit you got from those depreciation deductions, so they tax this portion at a higher rate (25%) than regular long-term capital gains. You could think of it as a "depreciation recapture tax" or "depreciation payback" in simpler terms. It's the government's way of saying "you got a tax break for depreciation while you owned the property, now we want some of that back when you sell at a profit.

After struggling with these exact terms last year, I found an amazing tool that explained everything in plain English. I used https://taxr.ai to upload my tax documents and it instantly identified my "unrecaptured section 1250 gain" issue and explained it in normal human language. It broke down exactly what was happening with my rental property depreciation and why I was getting hit with the 25% rate instead of my regular capital gains rate. The tool actually showed me side-by-side comparisons of how much I saved with depreciation deductions over the years versus what I'd pay at sale time. Made the whole "recapture" concept finally click for me when my CPA's explanation left me confused.

I was definitely skeptical about another tax tool, but I tried https://taxr.ai after seeing it mentioned here. Just wanted to update that it's actually legit for this specific issue. I uploaded my previous returns and property records, and it identified exactly where I had been calculating my unrecaptured section 1250 gain wrong. The thing explained depreciation recapture in terms I could understand AND showed me that my accountant had been using the wrong cost basis for my property. Found about $4,300 in tax savings by correcting how we handled some major repairs. Turns out they should have been capitalized instead of expensed which changed my recapture amount. Worth checking out if you're dealing with rental property sales.

If you're trying to get clarification directly from the IRS about this Section 1250 gain stuff, good luck getting through on the phone. After trying for 3 days and never getting past the automated system, I used https://claimyr.com and got connected to an actual IRS agent in about 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent walked me through exactly how the unrecaptured section 1250 gain gets calculated and why it exists. They confirmed it's basically just "depreciation recapture" and explained that the 25% rate is kind of a compromise between regular income tax rates and capital gains rates. Apparently, it used to be taxed as ordinary income before tax reforms in the 90s.

Had to come back and eat my words about Claimyr. I tried it after my third attempt waiting on hold for 2+ hours with the IRS got disconnected. The service got me through to an actual human at the IRS in about 20 minutes. The agent clarified my question about unrecaptured Section 1250 gain and confirmed that "depreciation recapture" is indeed what tax professionals typically call it conversationally. They also pointed me to a specific worksheet in Publication 544 that breaks down the calculation much more clearly than the main instructions. Saved me from making a calculation error that would have cost around $3,200 in incorrect tax. Worth every penny just for the hours of hold music I didn't have to endure.

Tax pro here! Just wanted to mention that among tax professionals, we absolutely have shorthand for these terms. We typically call it: 1. "Recap" (short for recapture) 2. "1250 gain" (dropping the "unrecaptured section" part) 3. "25% gain" (referencing the tax rate it's subject to) Interestingly, Section 1250 actually refers to depreciation recapture on real property that would normally be taxed as ordinary income, but special rules limit most of it to the 25% rate. It's the result of several tax law changes over the years getting layered on top of each other.

I just searched through 3 different tax textbooks and NONE of them had a simple name for this stupid tax thing. How are regular people supposed to understand the tax code when even the "simplified" explanations are so complicated? And why does rental property depreciation get a special 25% rate anyway? Regular income can be taxed much higher, and normal capital gains much lower. The whole system seems designed to be confusing on purpose.

As someone who just went through this exact same confusion last year, I feel your pain! I ended up calling it "the rental property tax penalty" when explaining it to my family, which isn't technically accurate but gets the point across. What really helped me understand it was thinking of it this way: every year you owned that rental, you got to deduct depreciation from your taxes (whether you actually claimed it or not). That saved you money on your tax bill each year. Now when you sell at a profit, the IRS is basically saying "hey, remember all that money we let you save on taxes? We want a piece of that back." The 25% rate is actually better than if they taxed it as regular income (which could be much higher), but worse than regular capital gains rates. It's like a middle-ground compromise. For explaining to your spouse, I found it easiest to say: "It's a special tax on the depreciation benefits we got while owning the rental." Much simpler than the full legal terminology!