Pros for converting personal property to business use
Course:- Taxation
Reference No.:- EM13860388

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Question: "Tax Planning and Fiscal Policy" Please respond to the following:

After reviewing the scenario, discuss at least three (3) pros and three (3) cons for converting personal property to business use, and recommend at least two (2) implementation strategies that would increase the depreciable bases used to calculate depreciation expense. Provide support for your recommendation.

From the e-Activity, imagine that you have started a business and have purchased business assets, such as computer equipment, vehicles, and a building. Suggest at least two (2) implementation strategies to help you ensure that you are calculating the correct amount of depreciation. Provide specific examples of such strategies.


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Converting a personal property into a business property has some advantages as well as disadvantages but many of the experts argue that the tax benefits received by converting it outweigh the disadvantages altogether.The advantages of converting a personal property into a business property are given below:

• Depreciation ?Depreciation becomes a magical way to reduce the taxes once a personal property is converted into a business property. In every financial year, the owner can write off a portion of the property’s purchase cost as an expense, which will help in reduction of the taxable income.

• Dual-Use Deductions ?If a person can use creativity then he can make use of the dual deductions that can be done on the taxable income. For example, a person can write off a portion of his phone bill if he uses the same phone for personal as well as for business use.

• Rental income ? if a personal property is converted into a business property, it can also be sold to someone on contract basis for which the person will have to pay regular amount of money, also known as rent. Thus, rent can become one of the biggest advantages of converting a personal property into a business property.

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