Key Takeaways
- Real estate tax (also called real property tax) is levied on land and structures by local governments; personal property tax is levied on movable assets like vehicles.
- In the DMV, real estate tax rates vary significantly: DC has relatively low rates with high assessed values; Virginia counties like Fairfax and Loudoun have moderate rates; Maryland counties vary widely.
- Real estate taxes are typically paid through escrow as part of your monthly mortgage payment — your lender collects and remits; for cash buyers, taxes are paid directly to the locality.
- Tax assessments are not the same as market value — if your assessment seems high relative to comparable sales, a formal appeal with supporting comps can reduce your annual tax burden.
The difference between real estate taxes vs. property taxes is that real estate taxes are what the city or municipality you live in charges you for your property and based on the fair market value of your home, while property taxes are related to any moveable items you own. Examples of this include furniture, cars, boats, equipment, and business machinery. Real estate taxes are different from property taxes in that you have to pay taxes on real property.
Real property is anything directly connected to the land like a house, a well, a barn or anything not movable. The same applies to businesses that own an industrial facility or a manufacturing facility. Property taxes are the taxes you pay on moveable items that you own, which can be anything from a car to a boat. For businesses, property taxes apply to machinery and equipment.
Basically, real estate taxes apply to your fixed property that can’t be moved. Property taxes only apply to your personal property that can be moved.
One scenario that makes this comparison tricky is with a mobile home. A mobile home is usually considered personal property, which means that you would need to pay property taxes on it. However, it’s possible for a mobile home to be considered real property if you own the land that the mobile home is usually situated on. In this case the mobile home will be taxed as though it’s real property.
And now you know the differences between real estate vs. property taxes and how they apply to your situation.
