Unrecaptured Section 1250 Gain refers to the 'gain' (profit) when you sell real estate (Section 1250) and it was depreciated (unrecaptured).
So let's say that you sell real estate that had been depreciated. The amount of depreciation that you took lowers the 'basis'. In other words, if you bought the real estate for $100,000 and took $20,000 of depreciation on it, the 'basis' is now $80,000. That $80,000 is used to determine your 'gain' (profit).
Let's say you sell the real estate for $150,000. You have a 'gain' of $70,000 ($150,000 - $80,000). Of that that $70,000 gain, $20,000 is because of the depreciation that you claimed. That $20,000 is "Unrecaptured Section 1250 Gain".
The taxes are different for "Unrecaptured Section 1250 Gain" than regular long-term capital gain. The Unrecaptured Section 1250 Gain is taxed at your regular tax bracket, up to a maximum of 25%. Long-term capital gains are taxed at lower rates, usually 15%.
So in my example above, the $20,000 of Unrecaptured Section 1250 Gain would be regular tax rates (usually 25%) and the $50,000 would be taxed at long-term capital gain rates (usually 15%).
