As an intended property owner, you might be asking yourself what the difference between personal property vs real property is. The fact remains that these two have a lot in common, but they also differ in terms of the way that they’re taxed and the rights they confer to their owners.
Although each category consists of different types of assets, the dividing line between personal property and real property tends to be pretty clear-cut in most cases.
Before we look at the true differences between personal property vs real property, let’s first look at the individual definitions of real property and personal property.
What Is Real Property?
This real property definition will make you understand that the term also called real estate, is any land, including fixtures and improvements. Building materials, such as wood, metal, or other materials like construction supplies are not considered real property on their own; rather, they can become a real property if they are connected to the land and plants such as trees and vegetation grow on it.
Nonetheless, those plants that require frequent work and cultivation such as crops may not be considered real property.
In Summary, real property includes
- Mineral right
- Railroad Tracks, and Roads
Is a House Real Property?
Yes, a house is considered real property. Personal property refers to everything else that is not real property. While a house is considered real property, a dining room set is not real property by personal property. What then is personal property looking from that perspective?
What is Personal Property?
Personal property is any possession that you own that can be easily moved from one place to another. This possession can include food items, fashions, furniture, electronics, instruments, and gadgets among others.
There are called personal because they are mobile and are your personal belongings that can be used and moved to another place anytime. Online a house that you cannot move.
It also includes household items such as furniture, lawnmowers, and appliances. These types of personal property are typically covered by insurance if they are stolen or damaged by an accident.
Personal property also refers to intangible possessions such as copyrights and patents. These kinds of personal property can’t be touched but still, have value.
For example, a songwriter owns the copyright to a song he has written. The copyright is protected by law and gives him exclusive rights to reproduce his work for a profit. Personal items include:
- Alcoholic beverages.
- Business license fees.
- Candy, gums, mints, etc.
- Cards: greeting, holiday, birthday, thank you, etc.
- CDs, cassettes, books that are not textbooks or reference material, etc.
- Coffee room supplies: coffee, tea, creamer, sugar, etc.
Good Examples of personal property
Appliances, electronics, furniture, clothing, and items for hobbies. These kinds of things are usually easy to identify as you move into a new place because they are portable and can be easily grouped together. This makes them easier to count and track when it comes to time to move them.
When is property considered personal?
A property is considered to be personal property when it is movable. It can easily be transferred from one place to another.
Personal properties are not attached permanently to any land or building and can be moved without causing any damage. For example, your car, furniture, and other household items are considered personal properties.
On the other hand, real properties are immovable assets that cannot be transferred from one place to another without causing any damage. For example, land and buildings are considered real properties.
Type of Personal Property
Basically, they are the types of personal property that are tangible, intangible, and listed.
Tangible Property: This type of property is anything that can be physically touched. This includes cars, clothing, furniture, and appliances.
Intangible Property: This type of property is anything that cannot be physically touched but can still be owned. This includes patents, copyrights, and trademarks.
Listed Personal Property: This type of property is any personal property that has a serial number or other identifying numbers such as a license plate or VIN number.
Differences Between Personal Property VS Real Property
There are many differences between personal property vs real property, although it can be hard to tell them apart sometimes. However, below are some of the major differences between personal property and real property.
- Personal property is movable and real property is immovable.
- Personal property can be owned by an individual or a company, but real property can only be owned by an individual or a company that has been given ownership of it by its owner (the government).
- personal property is usually used for business purposes, while real property is mostly used for residential purposes.
- Personal property usually depreciates in value over time, while real property increases in value over time.
Similarities Between Personal Property vs Real Property
Below are some of the similarities Between Personal Property And A Real Property
- Both are a form of property that can be bought and sold.
- Both may have an owner or owners, and both may be transferred from one owner to another by sale, gift, inheritance, or device.
- Both are subject to taxation (although some states do not tax real property).
- Both may be mortgaged or encumbered by a lien.
- Both have a value that can be determined by an appraisal or assessment of its fair market value, which is generally what a willing buyer would pay and a willing seller would accept in an arms-length transaction where neither is under duress to buy or sell and both parties have reasonable knowledge of relevant facts.
Is Cash real or personal property?
NOT-according to the law. Cash is not considered tangible personal property.
How much real property becomes personal property?
Property is considered personal when it has been severed from the land. Acquiring personal property can happen through production, purchase, or gift. Finding a personal property can also happen in certain circumstances.
The main difference between personal property and real property is that, with personal property, you can move it from one place to another. A person’s house is an example of real property.
The word real literally means relating to real estate or land. It cannot be moved as long as it stays connected to a foundation or doesn’t disassemble into parts.