Fixed asset used for private purposes


Entrepreneurs running a business often use various assets, classified as intangible assets, fixed assets or equipment. However, the most common are fixed assets, which are often also intended for private purposes. Can a given component constitute a fixed asset then? Will depreciation write-offs constitute a tax deductible cost? Answer below.

What is meant by a fixed asset?

The entrepreneur should understand fixed assets as assets that are:

  • owned or jointly owned by the taxpayer,
  • complete and serviceable
  • used for business purposes.

Importantly, the expected useful life cannot be shorter than one year.

Pursuant to Art. 22 sec. 8 of the Personal Income Tax Act (hereinafter: the PIT Act), components meeting the above conditions may be included in the register of fixed assets and intangible assets, thanks to which depreciation write-offs may constitute a tax cost.

When can depreciation write-offs not be a cost?

The catalog of costs that are not tax deductible costs has been defined in Art. 23 of the PIT Act. Of 1 point 45a defines, inter alia, in what situations depreciation write-offs on fixed assets and intangible assets cannot be a tax cost:

"The following are not considered tax deductible expenses:

a) acquired free of charge, except through inheritance or donation, if:

  • this acquisition does not constitute income from the gratuitous receipt of goods or rights, or
  • this income is exempt from income tax, or
  • this purchase constitutes income from which the collection of tax has been waived pursuant to separate provisions,

b) if before 1 January 1995 they were acquired but not included in fixed assets or intangible assets,

c) given for free use - for the months in which these components were put into free use ”.

Fixed asset also used privately

In a situation where the taxpayer uses the assets entered in the register of fixed assets and intangible assets, both for business and private purposes, then write-offs on this type of asset may not constitute a tax deductible cost. At this point, the basic condition that allows for the classification of a given thing as a fixed asset - use for the purposes of business activity (only and exclusively!) Is no longer met.

Fixed assets and a car used for private purposes

This type of position is also confirmed in tax interpretations issued by representatives of the ministry:

(...) since the passenger car is used both for business purposes and for private purposes, it does not constitute a fixed asset. Therefore, the Applicant may not include depreciation charges on the car in question as tax deductible costs. On the other hand, the expenses related to the use of this car for the purposes of business activity, determined on the basis of the vehicle mileage record kept, will be a tax deductible cost.”(Interpretation of IPTPB1 / 415-472 / 13-3 / KO of September 30, 2013 issued by the Director of the Tax Chamber in Łódź).