Personal property tax is different from “real” property (or real estate) tax that applies to homes, buildings, or land. The main distinction is that personal property refers to movable property or assets like vehicles, boats, equipment, or furnishings. Whereas real property only includes fixed or immovable structures or property. Each state or locality may have a slightly different definition of what constitutes taxable personal property and what items are exempt. For example, in California, taxable personal property must be tangible, and can include items such as portable equipment, tools, office items and furniture, and the like. Some places may include animals or livestock as personal property. In addition to real property tax (building and land property), some states or jurisdictions also tax personal property that is not attached to the land, like vehicles, furnishings, and boats.
Example of Personal Property
To give an example, this is how it works for residents of Oregon, as per the Oregon Department of Revenue. Personal property is valued at 100% of its real market value. Anyone who has taxable personal property has to file a return by March 15. They will then receive by mail a property tax statement in late October. The taxpayer is obligated to pay at least one-third of that tax bill by November 15 to avoid interest charges. If they pay in full by that point, they get a 3% discount on the bill. If not, the remaining payments are due February 15 and May 15. Outstanding balances will turn into a lien on all personal property by July 1.
Do I Need to Pay Personal Property Taxes?
If you reside in a state or locality that imposes personal property taxes, you’re required to pay them or will face a penalty from the IRS. Although each state and local government has its own rules and personal property tax rates, the good news is all taxpayers are entitled to claim a deduction for personal property taxes on their federal income tax if they itemize. The only requirements for deducting personal property taxes are that the taxes you paid must be based on the property value, and the tax must be imposed on an annual basis.
