What classification is given to real property that is subject to cost recovery deductions?

Real property that is subject to cost recovery deductions is classified as 1250 property. This classification specifically pertains to real property, which includes buildings and other structures that generate income. Under U.S. tax law, the cost recovery deductions for 1250 property are typically calculated using the Modified Accelerated Cost Recovery System (MACRS).

This allows taxpayers to recover the cost of their investment in the real estate over time, reflecting its depreciation. It's important to distinguish 1250 property from other classes of property, such as 1245 property, which refers to personal property and certain types of property that are depreciated and can be subject to different rules and recapture provisions upon sale. Tangible property refers to physical assets, but it encompasses a broader range of items, not specifically real property, while intangible property pertains to non-physical assets such as patents and copyrights, which are not subject to cost recovery in the same way as real property. Thus, 1250 property accurately captures the nature of real property eligible for depreciation deductions.