The Difference Between Tangible Taxes Vs. Property Taxes

No matter where you live, you pay property taxes on real estate you own, whether it is a house, commercial property or raw land. The municipality in which the property is located assesses the property and sets the tax rate, assessing you accordingly. When a town or city passes its budget each year, it sets the annual tax rate. If your property is mortgaged, the lender might pay the taxes to the municipality, and the taxes could be included in your monthly mortgage payment. If you own the property outright, you are responsible for paying the property taxes. These taxes are generally paid quarterly.

In Latin, ad valorem means "according to value." Ad valorem might be used interchangeably with the term "property taxes," and it can refer to real estate property taxes. Many states or cities also charge annual taxes on other personal property, such as motor vehicles, boats, trailers and other items, based on the estimated value. For example, you will pay higher ad valorem taxes on a brand-new car than you would on a much older model you might still be driving.

Depending on the jurisdiction, tangible taxes often refer to property used for a business. This includes equipment, machinery, tools, furniture, supplies, signs or anything else used commercially. Unlike property taxes, where a local tax assessor determines the value, the business supplies the valuation each year to the town for tax purposes.

Other rented or leased items might fall under personal tangible taxes. If you live in a mobile home and also own the structure and the land, in most states you will pay property taxes. If you own the home but rent the land, you might be charged tangible taxes on accessory structures, such as a carport, screened porch or utility shed on the property. Even air conditioners and awnings might be taxed, depending on the state. If you rent a property and also rent furnishings and appliances, tangible taxes might be levied on these items.