Real property
(3) Real property. (i) For purposes of subparagraph (1) of this paragraph, the term real property means any property which is not personal property within the meaning of paragraph (b) of 1.1245-3. The term section 1250 property includes three types of depreciable real property. The first type is intangible real property. For purposes of this paragraph, a leasehold of land or of section 1250 property is intangible real property, and accordingly such a leasehold is section 1250 property. However, a fee simple interest in land is not depreciable, and therefore is not section 1250 property. The second type is a building or its structural components within the meaning of paragraph (c) of 1.1245-3. The third type is all other tangible real property except (a) property described in section 1245(a)(3)(B) as defined in paragraph (c)(1) of 1.1245-3 (relating to property used as an integral part of a specified activity or as a specified facility), and (b) property described in section 1245(a)(3)(D). An elevator or escalator (within the meaning of section 1245(a)(3)(C)) is not section 1250 property. (ii) The provisions of this subparagraph may be illustrated by the following example: (4) Coordination with definition of section 1245 property. (i) Property may lose its character as section 1250 property and become section 1245 property. Thus, for example, if section 1250 property of the third type described in subparagraph (3)(i)(a) of this paragraph is converted to use as an integral part of manufacturing, the property would lose its character as section 1250 property and would become section 1245 property. However, once property in the hands of a taxpayer is section 1245 property, it can never become section 1250 property in the hands of such taxpayer. See also paragraph (a) (4) and (5) of 1.1245-2.