Are you confused about the difference between personal property and real property? Do you wonder why certain things are considered part of a house or building while others are not?
Personal property is movable assets owned by individuals or businesses, such as clothing, jewelry, furniture, and vehicles. Whereas real property is immovable assets owned by individuals, businesses, or governments, such as land, buildings, and other structures.
Personal vs. Real Property
| Personal Property | Real Property |
|---|---|
| Personal property refers to movable assets that individuals own, such as clothing, jewelry, furniture, and vehicles. | Real property refers to immovable assets that individuals own, such as land, buildings, and other structures. |
| It is generally owned by individuals or businesses. | It is generally owned by individuals, businesses, or governments. |
| Personal property is generally easily transferable from one owner to another. | Real property is generally not easily transferable due to legal formalities such as deeds and titles. |
| It often has a lower overall value compared to real property. | It often has a higher overall value compared to personal property. |
| Personal property is subject to sales tax, property tax, and use tax in some cases. | Real property is subject to property tax and other taxes levied on real estate. |
| It often depreciates in value over time due to wear and tear. | It may appreciate in value over time due to location and market conditions. |
| Personal property is often covered by personal property insurance. | Real property is often covered by homeowner’s insurance. |
| Maintenance and upkeep of personal property are the responsibility of the owner. | Maintenance and upkeep of real property are the responsibility of the owner. |
| It generally has less protection under the law compared to real property. | It generally has more protection under the law compared to personal property. |
Definition of personal property
Personal property is defined as any type of movable property that is not permanently affixed to real estate. Personal property is considered to be anything that can be picked up and carried away.
This includes items such as clothing, furniture, jewelry, and vehicles. Real property is land and any structures or improvements that are permanently attached to it.
Definition of real property
Real property is defined as “land and anything permanently attached to it, such as buildings, fences, or wells.” This definition includes both improved and unimproved land.
The term “real property” is derived from the Latin word res, which means “thing.” The concept of real property has its roots in English common law, which was developed by judges who decided cases based on precedent.
Real property generally refers to three types of interests: ownership interests, leasehold interests, and easements.
Ownership interests include fee simple interests and life estates.
Leasehold interests are created when someone leases land from a landlord for a specific period of time.
Easements are non-possessory interests that allow someone to use another person’s land for a specific purpose (such as a right-of-way).
Similarities between personal and real property
- Both types of property can be bought and sold, and both can be used as collateral for loans.
- Both types of property are subject to taxation and can be inherited by heirs.
Examples of personal and real property
Examples of personal property include clothing, furniture, cars, and jewelry.
Examples of real property include buildings, trees, minerals, and water rights.
Advantages and disadvantages of each type of property
- Personal property is easier to sell because there are no real estate taxes.
- Real property is more expensive to sell because you have to pay capital gains tax on the sale.
- Real property is also more expensive to maintain because you have to pay for repairs and upkeep.
Key differences between personal and real property
- Real property is that personal property refers to movable assets, while real property refers to immovable assets.
- Another difference between personal and real property is how they are acquired. Most people purchase real property, while personal property is often acquired through inheritance or gift.
- Real property generally has more legal protections than personal property. For example, it is easier to sue someone for damaging your car than your house.
- Difference between stale cheque and post-dated cheque
- Difference between standard costing and budgetary control
- Difference between transactions and events
Conclusion
Knowing what type of asset is make it easier for you to make decisions about how you want to manage them and create a plan that works best for your goals. Whether you’re looking at purchasing something or selling off some of what you own, having a proper understanding can help you make informed decisions.
