Real estate and property taxes are similar in the following ways: Individuals pay them to the related authorities The government controls them both They contribute to the country's economic growth by allowing the government to generate revenue and utilize them for developmental projects.
Nonetheless, there’s a fine line between both. Because people often confuse the two terms, it is crucial to understand the difference between the two. Here’s how real estate and property tax differ.
Differ By Definition The primary difference between real estate and property tax is that the former is related to the land, whereas the latter is related to privately owned properties. Real estate examples include buildings and related materials, whereas private properties are vehicles, jewelry, RVs, farm and business equipment, planes, boats, etc.
To simplify it further, real estate is immovable, whereas personal property is moveable.
Payment Period When you’re obliged to pay both taxes differs. For instance, real estate taxes are collected monthly, whereas private property taxes are annual taxes levied on movable items.
Deductions You can deduct real estate taxes on your property as costs on the federal tax return if you live there and itemize deductions. You also may be able to deduct personal property taxes if you itemize. However, it won’t benefit you much because the reductions would be quite low on recreational vehicles or boats. Note that this does not happen because your personal property is less valuable than your home. The deduction procedure varies because the former is taxed at a rate lower than the latter.
Type of Property The type of property involved also varies. Real estate tax includes real property. On the other hand, property tax is only levied on privately owned properties.
Tax Rates One of the significant differences between real estate and property tax is this one. Real estate taxes are much more expensive than personal property taxes. Here’s how. You can register a vehicle yearly for charges of $50-$80 which may hold the value of $30,000 to $70,000. A home, on the flip side, is levied at a higher value with an increased tax rate. In fact, a cost-effective or cheap real estate tax easily runs into hundreds of dollars.