Types of Property for Tax Purposes
You've always dreamed of buying a home, condo, or other structure. You basically want a place you can truly call your "own." But before you set out to buy your dream home, you'll want to know more about the different types of property for tax purposes. Below you will find key information about real and personal property and where to go if you additional questions. Remember, it is always best to consult with a local real estate attorney before making any major real estate decisions to be sure you have the most up-to-date law in front of you.
Real and Personal Property Overview
There are two basic categories of property: real and personal. The assessment procedures and the tax rate will vary between these two categories. Real property, in general, is land and anything permanently affixed to land (e.g. wells or buildings). Structures such as homes, apartments, offices, and commercial buildings (and the land to which they are attached) are typical examples of real property.
Basically, personal property is any property that is not real property. Personal property is not permanently attached to land. In most cases, it is moveable and does not last as long as real property. Personal property includes vehicles, farm equipment, jewelry, household goods, stocks, and bonds.
Types of Personal Property
Personal property is divided into "tangible" and "intangible" forms. Tangible personal property is just that: it has a physical form. It can be seen, touched, and moved. Examples of tangible personal property include clothing, books, and computers. On the other hand, the notion of intangible personal property is an abstraction. They do not usually have physical forms (other than certificates or accompanying records). These include assets such as patents, trademarks, stocks, and bonds.
Classes of Property
In addition to the basic types of property, property is grouped into various classes and subclasses for purposes of tax assessment. These classes are based on the property's use. These schedules of classes vary considerably from state to state. For example, a state may have the following classes of property:
- Class 1. Agriculture, grazing, livestock, notes, bonds, stocks, accounts receivable
- Class 2: Commercial properties
- Class 3: Motor vehicles
- Class 4: Personal property, except motor vehicles
- Class 5: Residential, farm homes
- Class 6: Swamp and waste
Property classification according to various uses or types serves as a basis for adjusting the rate of tax.
Types of Property for Tax Purposes: Additional Resources
If you still have questions after reading this article, you may wish to do additional research about the law. Click on the links below to learn more.
- Impact of Changing Property Values on Property Taxes
- Tips for Challenging Valuation of Property
- Payment of Property Taxes
Get Professional Legal Help With Your Property Tax-Related Issues
It pays to fully understand what your tax obligations will be before buying a house, since it will likely comprise a sizeable portion of your home-related expenses. A local real estate attorney will be able to help you make sense of it all.