What's the Difference between Real Estate Tax, Property Tax and Personal Propert

Elise Williams

2023-03-24 17:08:10 • Filed to: Real Estate • Proven solutions

With the confusion emanating from real estate tax vs property tax it helps to understand the diverse concepts and how they apply in property investment. It helps you prepare accordingly as you learn what to expect in real estate taxes and where personal property taxes come in. The following are facts to help you understand this, including how Buildium property management software can help.

Difference between Real Estate Tax, Property Tax and Personal Property Tax

Is real estate tax the same as property tax? Property tax and real estate tax are used to refer to the same tax and usually depend on who is using which. For instance, normal people simply term it as ‘property tax' while ‘real estate tax' is usually used by IRS. Real estate or property taxes refer to immovable property taxes on structures or land erected or attached permanently on the ground and includes land, building and houses. Homeowners are expected to pay real estate property tax to the respective tax assessors at the local level or do it indirectly through mortgage payments every month.

Personal property tax is a bit different and refers to a yearly movable assets type of imposed tax on items such as planes, recreational vehicles, mobile homes to boats and vehicles. For instance, license fee or registration of a vehicle paid by the owner based on the vehicle's value is definitely personal property tax.

How Does Real Estate Tax Work

Are real estate taxes property taxes or are real estate taxes the same as property taxes? Yes and imposed across the divide in all the states in America, including District of Columbia. Real estate property tax revenue is drawn mostly form land and its improvement although states go a little further and tax personal property. Property taxes are a critical resource of local government revenue and significant own-source type of tax revenue for special districts, school districts, townships, cities and counties.

Property tax rate however differ across the world, widely different within the United States and almost incomparable. Statutory tax rates are used by local governments, including other methods.

Essentially, the taxing entity usually assesses the value of the real estate through estimation of the selling price of the property, acquisition value or last property sale price as well as property income generation potential or assessed as per the traits of the property such as location. In recent times, property tax revenue and rates have been limited by states, including increase in property value that has already been assessed to lower reliance on real estate tax.

Millage or Mill Levy tax is heavily used in calculating property taxes and refers to the property value tax rate where one mill denotes one cent's one tenth, where an assessed real estate property value of $5,000 will have $5 as the one mill. Note that tax levies are different in different tax jurisdiction and calculation differs. An assessor reviews all the required details on the property prior to making an overall value estimate.

How Does Personal Property Taxes Work

Property tax is imposed by the state and each tax jurisdiction follows its own unique tax assessment of the property. To file personal property tax within your jurisdiction all you need is a specific form provided by the county. In most counties, all property must be reported including a fair cost and market value of each. During the personal property reporting the value tables provided can be used in the estimation of value as per the useful life and age of the personal property.

Those who have paid personal property tax to a local jurisdiction can requests IRS to deduct it from their federal tax return although specific requirements must be met. In certain states in America personal property taxes only apply to commercial or business premises and deemed to be anything you can remove from the commercial establishment without any damage such as office furniture.

Buildium - Software Compatible with Real Estate Tax and Property Tax

Buildium is unique property management software that makes real estate management easier and efficient, helps you expand personal portfolio, manage a few doors to thousands of units, and connect with other property investors and access trends, insights, tricks and tips on staying ahead in your property investment business. Buildium is that unique property software management tool with all the diverse elements you come across and need to properly run your real estate firm.

Try Buildium for Free >>>

In real estate you engage clients about property taxes, from taxpayers IDS to W-9s as well as income statements for months or entire 12 months for efficient reporting of deductions. Buildium allows any property manager to share these critical property tax reports fast online and access them whenever they're needed.

Free Download or Buy PDFelement right now!

Buy PDFelement right now!