What Makes Personal Property Tax Bills Change?
Personal property tax bills do not fluctuate like real estate property taxes do, so while they do change over time, the amount doesn't change wildly from year to year.
For example, real estate property taxes are often based on a percentage of the market value of your property. Market value can oscillate based on the area around you. If your neighbors all renovate their homes, the market value for the area goes up, but then so do your real estate property taxes, even though you didn't do anything. Personal property taxes don't work that way. If all of your neighbors buy new cars, your car's personal property tax rate does not change. However, some circumstances can cause variations tax bills.
Rates change from year to year based on depreciation. In general, age and wear and tear make your items less valuable. However, even the same items can be taxed differently. For example, you and your neighbor own the same car. It's the same make, model, year and color, and you even have the exact same optional features on it. Seems like they should be taxed the same personal property tax, right? Not necessarily.
Let's say you take great care of your car. You wash and wax it regularly, keeping the inside and outside in good condition. You keep it in the garage, and because you work from home, you only drive it once a week to the store. When you do drive it, you park far away to be sure that it does not get dinged by runaway shopping carts.
Meanwhile, your neighbor commutes 50 miles to and from work every day. He drives 400 miles every other weekend to visit his family. He has gotten into a couple minor fender benders. Since they just dented his car a bit, he didn't get them fixed. Plus, he parks his car on the street, where the bumpers get scratched, and the paint is starting to fade from the weather.
Your car's exceptionally low mileage and great condition mean it's worth more than your neighbor's worn-down car, even though they're the same vehicle. However, because you have the nicer car, your car's market value is higher, and your personal property taxes will be higher too. Take heart knowing that you will make a lot more if you sell it -- and of course, you have the sweeter ride.
Personal property taxes don't fluctuate much within a state, but if you're moving to a new state, you may want to check its taxes. What is taxable may change. You might even be moving to a state without personal property taxes. Some states, such as Ohio have phased out their personal property tax [source: Ohio Department of Taxation]. And more than 20 states have no tax on vehicles.
To learn more about personal property taxes, follow the links below.
Originally Published: Jul 29, 2008
- Clay County Historical Society. "1905 Personal Property Tax List." 9/10/05. http://www.info.co.clay.mn.us/history/1905_personal_property_tax_list.htm (Accessed 5/12/08)
- Department of Revenue: Property Tax. "Personal Property Assessment and Taxation." 6/21/07. http://www.oregon.gov/DOR/PTD/IC_303_661.shtml (Accessed 5/12/08)
- Office of the Treasurer. "Personal Property Tax." http://www.norfolk.gov/treasurer/personal_property_tax.asp (Accessed 5/12/08)
- Ohio Department of Taxation. "Tangible Personal Property." http://tax.ohio.gov/divisions/communications/publications/documents/tangible_personal_property_tax.pdf (Accessed 5/12/08)
- Saint Louis County Revenue. "Personal Property Information." http://revenue.stlouisco.com/Collection/ppInfo/ (Accessed 5/12/08)
- State of Maryland Department of Assessments and Taxation. "Assessment and Taxation of Business Personal Property in Maryland." January 2007. http://www.dat.state.md.us/sdatweb/pp_brochure.pdf (Accessed 5/12/08)
- Washington State Department of Revenue. "Personal Property Tax." March 2007. http://dor.wa.gov/docs/Pubs/Prop_Tax/PersProp.pdf (Accessed 5/12/08)