What does business use refer to?

Business use refers to the percentage of personal property that is utilized for business purposes. This concept is essential for determining the deductible expenses related to business property, such as vehicles, equipment, or office spaces. When individuals claim deductions for these items on their taxes, they must accurately assess how much of the property is used for business versus personal use. This distinction impacts the amount of depreciation, maintenance, and other business-related expenses that can be deducted.

For instance, if a vehicle is used 70% of the time for business and 30% for personal use, only the business portion can be deducted. This split provides an accurate representation of how the asset contributes to business income and allows for proper tax reporting and compliance. Understanding business use is crucial for maximizing deductions and for ensuring that businesses do not claim more than they are entitled to based on their actual usage.