The difference between personal and real property is very intriguing as many of us still think that whatever we buy with our money becomes our personal property. But, they vary on a lot of factors. For example, if you buy land and build a house on it, it is referred to as real property. But, the furniture inside the house, various appliances, vehicles, etc are referred to as personal property.
Personal Property vs Real Property
The main difference between personal property and real property is that personal property is anything that isn’t a real property like furniture, car, and any other content of the house. On the other hand, real property mainly refers to the land and any permanent building on it. For example, your home is real property and so is an educational institution.
Personal property is also known as movable property or chattels. There are two ways in which personal property can be insured. In the first case, the current value of the property is taken into consideration taking depreciation into account. And, in the second case, how much value it can compensate for a similar new item.
In simple words, real property constitutes lands and everything permanently attached to it. Understanding the valuations of real property is very complex as it depends on several factors. For example, a land of 10 acres in a metropolitan city might cost more than a land of 15 acres in a remote village.
Comparison Table Between Personal Property and Real Property
|Parameters of Comparison||Personal Property||Real Property|
|Definition||Personal property can be classified as those properties that include any form of any asset but real estate.||Real property mainly refers to land and anything permanently attached to it like houses, walls, etc.|
|Durability||Personal properties are not always very durable and in most cases, the value depreciates with time. For example, a car or furniture.||Since real properties mainly refer to the land they are long-lasting and very durable.|
|Legal Procedure||Legal procedure for buying or selling personal property is comparatively much easier.||People buying real properties have to go through many tedious legal procedures and take a lot of time.|
|Complexity||Personal properties are usually less complex and they are generally not taxed like fixed property.||Real properties are a bit complex to understand as after buying one has to pay tax and know things like who has the authority to sell, valuation in the current market, etc.|
|Immovability||One can easily move personal properties from one place to another.||Since real property mostly refers to real estate, one can neither move a land nor a house.|
|Categories||Personal properties are mainly classified as tangible and intangible.||In general, real property can be classified as residential, commercial, industrial, agricultural, etc.|
What is Personal Property?
From home appliances to automobiles, everything falls under personal property. Though most personal properties depreciate value over time, in the case of antiques it is the opposite. One of the main characteristics of personal property is that it is movable.
Personal property is classified into two groups, tangible and intangible. Tangible personal property includes vehicles, collectibles, furniture, appliances, etc whereas intangible personal property includes bank accounts, stocks, insurance policies, etc. Money also falls under the intangible property.
When families insure their home, the insurance policies cover personal properties as well and not just the building. In case of an accident, the policyholders get two options for covering their personal property, either actual cash value or the replacement value.
What is Real Property?
When one buys a piece of land, everything that is attached to it both natural and man-made falls under ownership. Real property can be of several types. For example, a private resident also falls under real property as well land for industrial use like building a factory also falls under the same category.
There is a difference between land and real estate. Land refers to both what is underneath the land such as minerals as well as the airspace above the land. But in the case of real estate, it includes the structures permanently attached to the land like buildings, sewers, streets, lakes, etc.
Once a person owns real property, he/she can sell it, keep it for further development, lease it, etc. Estates in real property can also be further divided into freehold estates and non-freehold estates.
Main Differences Between Personal Property and Real Property
- Personal properties are those properties that include any form of any asset but real estate whereas real property mainly refers to land and anything permanently attached to it like houses, walls, etc.
- Personal properties are not always very durable and in most cases, the value depreciates with time. For example, a car or furniture. On the other hand, real properties mainly refer to the land they are long-lasting and very durable.
- Legal procedure for buying or selling personal property is comparatively much easier as compared to real property which takes a lot of time and multiple steps.
- Personal properties are usually less complex and they are generally not taxed like fixed property. But, real properties are a bit complex to understand as after buying one has to pay tax and take care of other proceedings.
- One can easily move personal properties from one place to another whereas real property mostly refers to real estate, one can neither move a land nor a house.
- Personal properties are mainly classified as tangible and intangible whereas real property can be classified as residential, commercial, industrial, agricultural, etc.
When a person is buying land, it falls under the category of real property. The legal procedure of owning real property is much complex to understand. For example, the right of ownership, right to sell, taxes, etc. are going to be different if you build a home in that land from the situation where if you build a hospital.
On the other hand, personal properties are rather easy to understand. Anything that doesn’t include land and permanent structures on it belongs to personal property. There are two types of personal property, tangibles, and intangibles. Personal property can be easily hidden and transported. For example, many people sell antiques on the black market.