Accounting for a fixed asset constituting joint ownership


A solution often used by entrepreneurs in their business is the use of private property. In a situation where they meet the definition of a fixed asset, the taxpayer may enter them into the register of fixed assets and subject them to depreciation. What if the item in question is the joint property of the spouses? Read the article and find out how the settlement of a fixed asset constituting joint ownership should look like.

When is joint property created?

According to the Family and Guardianship Code, the joint property of the spouses is established by law. It covers property acquired during its lifetime by both spouses or by one of them (joint property), except for those listed in Art. 33 of the Act.

Common property and economic activity

Pursuant to Art. 22a paragraph. 1 of the Personal Income Tax Act, depreciation is applied to those assets that are owned or jointly owned by the taxpayer, acquired or manufactured on their own, complete and fit for use on the date of acceptance for use:

  1. structures, buildings and premises owned separately,
  2. machines, devices and means of transport,
  3. Other items

- with an expected period of use longer than one year, used by the taxpayer for the purposes related to his business activity.

As it results from the cited provision, the fact that a given asset is a joint property does not exclude the possibility of using it in the course of business activity by one of the spouses.

How to evaluate a joint-owned asset?

The issue of the valuation of fixed assets that are jointly owned by the taxpayer has been regulated in Art. 22 g of paragraph 1. 11 of the Income Tax Act:

If an asset is jointly owned by the taxpayer, the initial value of this asset is determined in proportion to its value in which the taxpayer's share in the ownership of this asset remains; this rule does not apply to assets constituting joint property of the spouses, unless the spouses use the asset in separate economic activities.

In connection with the above, when only one of the spouses, who shares joint property with the other, entered a given item in the fixed assets register, then it may make depreciation write-offs from its full initial value. Moreover, in this situation it makes no sense to draw up a lending agreement for property, which is anyway joint property.

On the other hand, if each of the spouses runs a separate business and both use a given asset in their companies, then the initial value is determined proportionally to the shares held. Depreciation write-offs are calculated only from the initial value determined in this way.