Real Estate Taxes Vs. Property Taxes: Understanding the Differences

If you own a homReal Estate Taxes Vs. Property Taxes The Differencee, you likely are familiar with real estate taxes. You might even have called them property taxes since the terms have become interchangeable. Many people might not realize the two taxes are not identical. Real estate taxes are the taxes you pay on the assessed value of your home that the municipality in which you own your property charges you. Personal property taxes are the taxes on moveable items you own, such as vehicles, boats, equipment, and furniture.

Real Estate Taxes

Real estate taxes are annual taxes a homeowner is entitled to pay on the assessed value of their house. Every city and state municipality determines how much the real estate tax rate is by multiplying the fair market value of a home by the predetermined percentage in that municipality to arrive at the correct tax assessment value.

Have you ever heard of the high cost of real estate taxes in the area complained about? This is what they are referring to, and higher tax rates are found in large cities. The amount of real estate taxes you pay may depend on how much your home is valued as well as the part of the country you live in.

Property Taxes

Property taxes are another name for personal property tax. Your personal property refers to items that aren't permanent or moveable. For example, your car would be considered to be personal property and when you register it every year, you are paying a property tax on it. Other home items like boats, campers, RVs, and farm equipment are taxed under personal property. Since they are all moveable, a personal property tax is assessed on their value.

Mobile homes are taxed as personal property rather than real estate, despite people living in them just as they would a house, though they are technically moveable. If you own the land you have a mobile home on, it would be taxed under real estate taxes on its assessed land value. How much you will pay overall on your personal property tax on these items depends on your city and municipality, as well as the going personal property tax rate as well as how much-assessed value each personal item is worth.

Key Differences of Note

The rate of taxes you pay is different. Real estate taxes are much steeper than personal property taxes. A home is assessed at a much higher value with a much higher tax rate. Even the cheapest real estate taxes in the country for a modestly valued home would likely be thousands of dollars. Personal property taxes might be deducted if you itemize, but the deductions will be a lot less on a boat or RV than they would on your home and go in a different place on your federal return.

What is Real Property?

Real property is considered to be structures that are built on land or above or under land, or affixed to land. These structures are considered to be permanently installed.

The Bottom Line

Despite sounding similar, real estate and personal property taxes refer to different types of tax. Municipality charges an amount of money based on the assessed value of your home: the real estate tax. Moveable items, such as vehicles, business equipment, and furniture are all taxed at a different rate, the rate for personal property.

An item that can be taxed as personal property rather than real estate might seem confusing. If the owner of a mobile home, for example, does not own the land the home is on, that mobile home will be considered personal property. If the mobile homeowner owns the land, then the land will be assessed for real estate tax.

Now the difference is made clear between real estate taxes and personality property taxes, you might be less likely to use the terms interchangeably and more apt to understand the tax statements and bills you receive for each one. Explore the best of Las Vegas today. 

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