In the often-confusing world of tax, understanding the difference between real property and personal property can be a challenge. While similar, the variations and nuisances on how taxes are collected on the two are different.
Real property is immovable – land or anything permanently built on the land. Your local government will assess, calculate, and collect taxes on real property owned by your business at the municipal or county level. The taxes levied are based on the value of the owned property. Information on real property is filed with local government, and your local government automatically distributes collection notices. Since the bill is calculated by the local tax assessor, businesses are not required to file a return on real property, only to pay the tax.
Personal property is movable property that is both tangible or intangible. It’s anything that can be subject to ownership (except land). For a business, personal property includes items such as furniture, equipment, software, and vehicles. Your local government will assess, calculate, and collect taxes on personal property, as well. In contrast with real property, your local taxing authority requires you to file a listing of these personal property assets with their office annually.
As always, feel free to chat with one of our professionals to better understand real vs. personal property and the taxation implications for your particular business.