{"id":369438,"date":"2016-04-04T10:47:27","date_gmt":"2016-04-04T15:47:27","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/realestate\/owning-a-home\/types-of-property-for-tax-purposes.html"},"modified":"2024-01-08T08:32:10","modified_gmt":"2024-01-08T13:32:10","slug":"types-of-property-for-tax-purposes","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/realestate\/owning-a-home\/types-of-property-for-tax-purposes.html","title":{"rendered":"Types of Property for Tax Purposes"},"content":{"rendered":"\n
\n \n
\n

Types of Property for Tax Purposes<\/h1>\n
\n
\n By Robert Rafii, Esq.<\/a> | Legally reviewed by Aisha Success, Esq.<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
\n

This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
\n

The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

There are two basic categories of property: real and personal. The property assessment procedures and the property tax rate will vary between these two categories. While income tax is based on the amount of money a taxpayer brings in, property taxes are based on assessed value of the property. This is known as an ad valorem tax. Ad valorem means the amount of tax on property is usually a percentage of its fair market value<\/a>.<\/p>\r\n

For example, when you buy personal property at a store, the sales tax is based on a fraction of how much you pay for that item. In much the same homeowners pay real estate tax that local government or municipality tax assessors calculate. The calculation on a local property tax bill may be subject to qualifying property tax exemptions<\/a>. In general, however, there will always be some degree of tax liability to cover municipal expenses for things like police, firefighters, and school districts.<\/p>\r\n

Real estate property tax assessments are conducted every tax year and may be paid in installments. Personal property taxes may be assessed quarterly or yearly. For example, property owners of business machinery may be required to pay different taxes on their equipment. If you are delinquent on tax collections, your property may become encumbered by tax liens<\/a>. After a certain period, the government may be able to force your property into seizure or foreclosure<\/a>.<\/p>\r\n

When you file your annual income tax return, you can claim tax credits<\/a> and tax deductions<\/a> based on local property tax payments you may have already made. There may also be other types of deductions, such as property depreciation<\/a>, that can reduce your yearly income tax liability with the Internal Revenue Service (IRS).<\/p>\r\n

Differences Between Personal and Real Property<\/h2>\r\n

Real property, in general, is land and anything permanently affixed to land<\/a> (e.g. wells or buildings). Typical examples of real property include immovable structures such as:<\/p>\r\n