Unrecaptured Section 1250 gain is a special type of capital gain that comes from selling real estate that you previously took depreciation on—usually commercial or rental property. When you sell the property for a profit, the IRS “recaptures” some of the tax benefits you got from claiming depreciation over the years. This portion of your gain is taxed at a higher rate than typical long-term capital gains but not as high as regular income. In simple terms, it’s a way the IRS makes sure you pay taxes on part of the earlier tax breaks you received. This mostly applies to real estate investors.