Is There a Difference? : Real Estate Taxes vs. Property Taxes
Real estate taxes vs. property taxes - aren’t they the same thing? Well, sometimes. The two terms are often used interchangeably, but they have different essential meanings, and there are certain situations where property taxes are not the same as real estate taxes. This short guide will help you understand the difference.
What Is Property Tax?
By definition, a property tax is a payment made to the government on any property you own, be it land or a car - any property movable or immovable. Property tax is thus a more general term than real estate tax.
What Is Real Estate Tax?
Real estate taxes are the annual payments you make to the government for your land or property. We use the term ‘immovable land’ to apply to any plot, building, house, or land that cannot be removed. The government uses the funds raised from real estate tax to pay for services such as schools, infrastructure, and safety and security.
What we refer to in Texas as “property tax” is essentially the same as what other states and the IRS refer to as real estate tax, which is why there is often confusion over the two terms. When the two terms are used properly, real estate tax is a tax on immovable property, and property tax is a more general levy on all types of property. If we want to make a more precise distinction, then we would distinguish between real estate tax and personal property tax.
What’s the Difference Between Real Estate Taxes and Personal Property Taxes?
As mentioned above, property tax is a general catch-all term referring to any tax you pay on assets you own. Real estate tax is a type of property tax that applies only to land and immovable assets. Then, you should be aware of another type of tax: personal property tax. This kind of tax is one that individuals and companies have to pay on movable assets, such as cars, boats, RVs, and planes. Personal property tax can be paid on local and state levels, depending on where you live.
In Texas, there is no state property tax. Still, real estate owners (both individuals and businesses) are taxed on the value of their immovable properties at the county or district level. In addition, there is a personal property tax that businesses are expected to pay. This tax levies all business assets used to produce income, such as machinery and equipment, office furniture, IT equipment and infrastructure, molds, tools, and even agricultural supplies. Inventory, finished products, and raw materials are taxable business personal property. Businesses must file their personal property tax return, listing all assessable personal property they own as of January 1. The return is due to the applicable appraisal district by April 15 each year to the applicable appraisal district.
Businesses will receive an assessed value notice between May 15 and June 15, somewhat later but similar to real estate taxes. The personal property filed assets are evaluated on a county-specific depreciation factor schedule. Businesses can appeal the proposed assessment within 30 days of the date of issuance, similar to real estate taxes. If there is no appeal, or once the appeal is considered correct, the next step is issuing tax bills, which happens at the same time as bills for real estate taxes, i.e., October to November each year. Payment is due on these bills by January 31.
Why Are Real Estate Taxes and Property Taxes Separate?
Personal property and real estate tax are separate because they apply to two distinct classes of assets - immovable and movable. You pay taxes on your home and other real estate you might own, and then, in addition to real estate taxes, entities pay taxes on personal property separately.
How to Remain Compliant on Your Property Taxes
Whether you are paying real estate tax on your family home or business personal property tax on your business assets, it is vital that you remain compliant at all times to avoid incurring penalties or facing legal action. To stay compliant, it’s crucial to file and pay accurately and on time, paying careful attention to all deadlines.
When it comes to real estate tax, be aware of your assessment deadlines, and be sure to file your appeal in a timely manner. Watch out for your bill around October, and make sure you have paid by January 31.
As for business personal property tax, use the services of an accountant to carry out an accurate assessment of your property. Make sure your return is submitted by April 15. When you receive your assessment around May, carefully examine it and be certain that it truly reflects the value of your business personal property. If an appeal is necessary, you must file it within 30 days. As with real estate tax, once the bill is issued to you, you have until January 31 to pay it. After that time, it will be considered late, and you will start to accrue penalties and interest.
Get Help With Your Texas Property Taxes
If you should fall behind on any of your real estate property taxes in Texas, help is available. Your best course of action is to acquire a property tax loan from American Finance and Investment Co., Inc. (AFIC).
AFIC. is a financial institution based in Texas. We offer property tax loans to Texas real estate owners to enable them to settle their debts to their local tax authorities. In light of the discussion above, it should be noted that AFIC deals only with real estate taxes. We do not finance personal property taxes. AFIC has been serving the financial needs of residents in Texas communities since 1946. With nearly eight decades of complaint-free consumer financing, we stand out as the first choice when it comes to manageable solutions for your tax debts.
We offer our clients an affordable, hassle-free way to ensure that your account with the local government tax office is paid in full and will work out a manageable repayment plan for you. AFIC can provide you with an instant quote by completing the form on our homepage. For qualifying properties, we can help you pay off your delinquent taxes and offer you the following benefits:
- Quick and completely online process
- No money down
- No credit check
- Free 30-day rate match
- Match competitors and beat their rate by 1%
- Avoid high penalties and foreclosure
We pride ourselves on finding solutions to suit the unique needs of our clients. Now that you have a better understanding of real estate taxes vs. property taxes, if you would like to discuss our property tax loans, please contact our experienced team at AFIC today.
