What You Didn’t Know About Personal Property Taxes
Personal property taxes are levied on property that is not real property. Real property is property that includes land and buildings attached to the land. Personal property is property that is moveable and includes items such as cars, boats, mobile homes, and equipment. In this article, we will cover what you didn’t know about personal property taxes, including how they are calculated, what they cover, exemptions, and more.
How is Personal Property Tax Calculated?
Personal property taxes are calculated based on the assessed value of the property. The assessed value is the value assigned to the property by the tax assessor. The assessed value is often calculated based on the purchase price of the property, adjusted for depreciation over time.
The personal property tax rate is set by the local government. The tax rate varies by state, county, or city. The tax rate is typically a percentage of the assessed value of the property. For example, if the assessed value of a car is $10,000 and the tax rate is 1%, the personal property tax on the car would be $100.
What Does Personal Property Tax Cover?
Personal property taxes cover a wide range of items, including cars, boats, campers, mobile homes, and rental properties. The tax may be included in your annual vehicle registration or billed separately by the local government.
Personal property taxes may also cover the equipment used in business operations, such as agriculture and construction. The tax on business equipment is often called a business personal property tax. The tax may be based on the estimated value of the equipment or the actual value of the equipment.
Exemptions from Personal Property Tax
Certain items may be exempt from personal property tax. The exemptions vary by state, county, or city. Some common exemptions include:
– Household Goods: Items that are used for personal or household purposes, such as furniture, clothing, or appliances.
– Vehicles for Disabled Persons: Vehicles that are specially adapted for use by a disabled person.
– Agricultural Equipment: Equipment used in farming or ranching.
In some states, there may be exemptions for veterans or seniors. It is important to check with your local government to determine what exemptions may be available.
Penalties for Non-Payment of Personal Property Tax
If you do not pay your personal property tax, you may be subject to penalties and interest. The penalties vary by state, county, or city. Some common penalties include:
– Late Payment Penalty: A penalty may be assessed if the tax is not paid by the due date.
– Interest: Interest may be charged on the unpaid taxes.
– Failure to File Penalty: A penalty may be assessed if the tax return is not filed by the due date.
If you are unable to pay your personal property tax, you may be able to set up a payment plan or negotiate a settlement with the local government.
Important Changes to Personal Property Tax Laws
It is important to stay up to date on changes to personal property tax laws. Here are a few recent updates:
– Virginia: Effective July 1, 2020, Virginia increased the personal property tax exemption from $1,000 to $2,500.
– Colorado: In 2019, Colorado passed a law that phased out the business personal property tax for small businesses by 2023.
– Iowa: In 2018, Iowa passed a law that exempts the first $30,000 of a business’ tangible property value from taxation.
It is important to check with your state or local government to determine what updates to the personal property tax laws may affect you.
Conclusion
In conclusion, personal property taxes are levied on property that is not real property and include items such as cars, boats, and equipment used in business operations. The tax is calculated based on the assessed value of the property and varies by state, county, or city. Certain items may be exempt from personal property tax, and penalties may be assessed for non-payment. It is important to stay up to date on changes to personal property tax laws to ensure you are meeting your obligations and taking advantage of any available exemptions.
State personal property law varies a great deal. Some states require an individual to pay personal property taxes and other do not. Depending on what state one lives in, the method of personal property appraisal will be different. There are no set nationwide rules that determine personal property law. Property taxes specifically deal with real estate property. Personal property taxes deal with many things. Personal property taxes are best known for charging taxes for all types of vehicles.
If personal property taxes are relevant in one’s state, then personal property law almost always requires that vehicles be covered. These types of vehicles are not limited to cars and trucks. Motorcycles, boats, wave runners and utility trailers are all items that must have a personal property appraisal to determine the tax dollar amount that should be paid. Under personal property law, any personal air crafts that one may own are also required to be taxed. Many people consider mobile homes to be property. However, they are subject to a personal property appraisal and taxed as well. Technically, mobile homes are still vehicles even though many people think of them as houses or regular
property.
Vehicles are not the only thing that one must pay personal property taxes on. Businesses and residents may both be required to pay personal property taxes. In some states, only businesses are required. In the states that require only businesses to pay personal property taxes, there is a particular way of determining what can be taxed. A personal property appraisal must be done on any item that can be removed from the building that houses the business as long as the building itself would not be damaged. This means that office furniture in the business can have a personal property appraisal but the building itself can not.
Under personal property law, many household items are not subject to being taxed. However, there are particular valuable items that one will be required to pay a personal property tax on. Examples are instruments or valuable pieces of art. Personal property taxes also must be paid on stocks and bonds in some states. Any state that has a personal property law has to have assessors to determine an item’s value. Items are assessed by calculating a percentage of their market value. Owning very expensive things will raise the amount of money one must pay for personal property taxes. Vehicles in particular are subject to high rates of personal property tax.
While personal property law varies drastically from state to state, some things remain similar. Vehicles are always included in the amount of personal property taxes one has to pay. Paying personal property taxes on other things, like certain household items may not always be required.
