What Is a Personal Use Property?

Personal use property is a type of asset or other property that an individual does not use for business purposes or as an investment. Quite simply, individuals use personal use property primarily for their individual purposes and for their own🏅 enjoyment.

Understanding Personal Use Property

Personal use property, such as primary residences, household appliances, vehicles, electronics, or clothing, to name just a few, is not bought for the purpose of making money. Typically, personal use property is part of an individual’s daily life or routine. Conversely, the primary goal of investment property is for the purchaser to yield some sort of profit from its eventual sale. Investment property can also provide the purchaser cash flows or ꦅincome, such as dividend income or rental income. Common examples of investment property range from the obvious, like stocks and bonds, to lesser-known property, like art and collectibles. Land can be an example of an investment property as well. 

What is and what is not personal use property can vary from 澳洲幸运5官方开奖结果体彩网:tax jurisdiction to tax jurisdiction, particularly when it comes to determining whether a loss on the disposition of the asset is 澳洲幸运5官方开奖结果体彩网:deductible. Typically, real estate receives different tax treatment, even if a home is for personal use. 

Technically, the 澳洲幸运5官方开奖结果体彩网:Internal Revenue Service (IRS) considers personal use property a capital asset and treats it differently than other types of property or assets. Taxpayers cannot deduct losses on the sale of personal use property, while a gain on the sale of such property is subject to taxation.

Personal Use Property 🐭and Theft and Casualty Losses

One exception to the rule is the 澳洲幸运5官方开奖结果体彩网:theft of and casualty losses on personal property; such losses are tax deductible, provided certain criteria are met. To be deductible, casualty losses must result from a sudden and unforeseen event. As the name implies, theft losses generally require proof that the property in question was actually stolen and not just lost or missing. Human activities, such as terrorist attacks and vandalism, are covered as well.

The Internal Revenue Service only allows such deductions for one-time events that are out of the ordinary. For example, natural disasters would qualify, such as earthquakes, fires, floods, hurricanes and storms. A loss cannot be claimed for something that occurred over time. An example of this would be property erosion, because the process is gradual.

Casualty and theft losses are reported under the casualty loss section on 澳洲幸运5官方开奖结果体彩网:Schedule A of Form 1040. They are subject to a 10% 澳洲幸运5官方开奖结果体彩网:adjusted gross income threshold limitation, as well as a $100 reduction per loss. The taxpayer must be able to itemize deductions to claim any personal losses.