What Is Property? Definition, Types, Valuation, and Taxation (2024)

What Is Property?

Property is a term describing anything that a person or a business has legal title over, affording owners certain enforceable rights over said items. Examples of property, which may be tangible or intangible, include automotive vehicles, industrial equipment, furniture, and real estate—the last of which is often referred to as "real property."

Most properties hold current or potential monetary value and are therefore considered to be assets. But properties can simultaneously be liabilities in some situations. Case in point: if a customer sustains an injury on a company's property, the business owner may be legally responsible for paying the injured party's medical bills.

Key Takeaways

  • Property is any item that a person or a business has legal title over.
  • Property can be tangible items, such as houses, cars, or appliances, or it can refer to intangible items that carry the promise of future worth, such as stock and bond certificates.
  • Intellectual property refers to ideas such as logo designs and patents.
  • Property owners may also have liabilities, which is the case if a business owner is on the hook for medical expenses resulting from a customer incurring an injury on his company's grounds.
  • The most common types of property are real, private, government-owned, and personal property.

Understanding Property

Intangible property describes assets, such as stock and bond certificates, that represent current or potential value but don't carry intrinsic value. While these items are merely pieces of paper, they might represent significant amounts of money. Other types of intangible property, such as a brand’s reputation, are more nebulous and cannot be signified by a paper document.

Intangible properties, like design concepts, song lyrics, books, and screenplays, are categorized as intellectual properties. Even though these are not physical in nature, they may carry significant value. Examples of intellectual properties include Nike’s “swoosh” logo and the chemical formula for Coca-Cola.

To enforce ownership of intangible properties, individuals and businesses typically hire lawyers to legally protect their items from infringement.

Types of Property

Property, in the broad sense, describes anything that a person, group of people, or entity owns. It includes real property, personal property, private property, government-owned property, and more.

Real Property

Real property is one of the most familiar types of property. It includes land, buildings occupying the land, and the rights to use and enjoy the land. Real property is the focal point of real estate, which deals with transactions (e.g., buying, selling, renting, and managing) involving land and buildings used for residential, commercial, and agricultural use.

Just as there are various types of property, there are different types of interests in property. Interests in real property include freehold estates and non-freehold estates. Freehold estates are ownership interests that have no expiration and can be inherited. Non-freehold estates, or leasehold estates, are not transferrable and have expirations; such estates include leases and other rental agreements.

Property law stipulates how real property can be used and the manner in which it can be legally transferred.

Personal Property

Personal property is as well known as real property but differs in that it does not include real estate (e.g., land and buildings attached to the land). Personal property is property that can be physically transferred and is not permanently attached to the land. It includes clothing, automobiles, furniture, tools, and more.

Personal property also includes intangible assets, such as bank accounts, patents, and investments. Although they are not physically moveable, rights remain with the person or entity listed as the legal owner, making them personal property.

Private Property

Private property is any property owned by a natural person or private entity. It includes personal, real, tangible, and intangible assets, including intellectual property. Private property is often categorized as real or personal; however, not all real or personal property is private property.

Private property is not open to the public nor is owned by a government. Governments can, however, assume ownership of private property under certain circ*mstances, such as eminent domain.

Government-Owned Property

Government-owned property includes all property—including real property, resources, and other tangible and intangible assets—owned by a government body. In contrast to private property, most government-owned properties are public. For example, libraries, public schools, and city parks are government-owned property available to the public.

However, all government-owned property is not accessible to the public, and some publicly-accessed property is not always available to the public. For instance, a city park may have a curfew, after which the public cannot access it. A government-owned property, such as a military research facility or lab, may not be accessible at all to the public.

Sometimes private property can be escheated to a local government body, rendering it temporarily or permanently government-owned. Also, in some cases, the private property owner forfeits or sells their property rights to the government.

Evaluating Property Assets

When auditors, appraisers, and analysts calculate the value of a business, they factor all of its underlying property into the equation. For example, a manufacturer of small machine parts may gross just $80,000 per year, but if it owns the factory in which it operates, and that building is appraised at $1 million, the overall value of the business would be substantially higher than profits alone suggest.

Furthermore, if that same company holds a patent for a part, it has the potential to generate substantial income by licensing the rights to manufacture that item to a larger business, rather than producing the part in-house. In this way, licensing deals may create lucrative revenue streams that significantly boost a company’s overall value.

Establishing Net Worth Through Property

An individual's net worth may be determined by calculating the total value of the properties they own, such as real estate, cars, jewelry, stocks, bonds, and retirement savings, and then subtracting any liabilities or debts from that figure.

For example, if an individual's assets include a $100,000 home, a $7,000 car, and a $65,000 IRA, the tally of their property comes to $172,000. But if that same individual is saddled with a $20,000 student loan and a $3,000 credit card bill, the total liabilities add up to $23,000. Thus, the total net worth would be $149,000 ($172,000 - $23,000).

When calculating an individual's net worth, less valuable items, such as furniture or articles of clothing are generally not factored into the equation, unless said items hold significant value as antiques or as rare collectibles do.

How Do You Find Out Who Owns a Property?

Locating the owner of a property can be done through an online search on a county assessor's website, with a court clerk, by soliciting the help of a real estate broker or attorney, or by a general online search.

What Are Property Taxes?

Property taxes, also known as ad valorem taxes, are tax assessments on the value of a property.

How Do You Calculate Property Taxes?

Property taxes are determined by multiplying a tax rate, determined by the local tax authority, by the assessed value of the property. If the value of a property is $100,000 and the tax rate is 4%, the property taxes are $4,000.

What Does a Property Appraiser Do?

A property appraiser is responsible for assessing the market value of a property for real estate transactions. In contrast, a property assessor assesses the value of a property for tax purposes.

The Bottom Line

Property includes the tangible and intangible assets a person or entity has title to and rights to use. There are various forms of property, each carrying its own set of rules for classification and use. Often, some assets may be classified as more than one type of property. A house is both real property and private property in some instances. A computer can be personal property and government-owned. It is important to understand the different types and the rights associated with them.

What Is Property? Definition, Types, Valuation, and Taxation (2024)

FAQs

What are the three classifications of property? ›

Types of Property. All property belongs to one of three categories: real property, personal property, or intellectual property.

What is the meaning of property type? ›

Property Type: A Real Estate Definition

Real estate refers to a piece of land and anything attached to it, such as a house or building. Real estate can be broken down into various property types. The term property type describes the type of real estate.

What are the three categories of properties? ›

Property law in the United States is complex and multifaceted, but these laws pertain specifically to three distinct types of property. Both state and federal laws exist to protect real property, personal property, and intellectual property.

What is the full meaning of property? ›

ownership; right of possession, enjoyment, or disposal of anything, especially of something tangible: to have property in land. something at the disposal of a person, a group of persons, or the community or public: The secret of the invention became common property.

How do you classify the property? ›

Real property may be classified according to its general use as residential, commercial, agricultural, industrial, or special purpose. To understand if you have the right to sell your home, you need to know which rights you possess—or don't possess—in connection with the property.

How does the IRS define property? ›

Real Property. Real property, also called real estate, is land and generally anything built on or attached to it. If you buy real property, certain fees and other expenses become part of your cost basis in the property.

What are the 7 types of properties? ›

Kinds of Property
  • Movable Property. Movable property can be moved from one place to another without causing any damage. ...
  • Immovable Property. Immovable property is one that cannot be moved from one place to another place. ...
  • Tangible Property. ...
  • Intangible Property. ...
  • Public Property. ...
  • Private Property. ...
  • Personal Property. ...
  • Real Property.
Nov 29, 2022

What is the most common property type? ›

Residential properties are the most common and widely recognized property type. These include single-family homes, townhouses, condominiums, and multi-family buildings. Residential properties cater to individuals and families seeking a place to live or investors looking for rental income.

What is a 1245 property type? ›

What is Section 1245 Property? Generally, 1245 property is known as “tangible” or “personal” property. 1245 tangible property assets are depreciated over shorter depreciable lives mandated by the Internal Revenue Service (IRS).

What is the properties and types of properties? ›

Types of property include real property (the combination of land and any improvements to or on the ground), personal property (physical possessions belonging to a person), private property (property owned by legal persons, business entities or individual natural persons), public property (State-owned or publicly owned ...

What are the three values of a property? ›

There are three internationally accepted methods of measuring the value of property: the cost approach, the sales comparison approach and the income approach.

What are 3 characteristic properties? ›

Examples of characteristic properties include melting points, boiling points, density, viscosity, solubility, crystal shape, and color. Substances with characteristic properties can be separated. For example, in fractional distillation, liquids are separated using the boiling point.

What is legally defined as property? ›

Property is anything (items or attributes/tangible or intangible) that can be owned by a person or entity. Property is the most complete right to something; the owner can possess, use, transfer or dispose of it.

How can we define property? ›

Property is any item that a person or a business has legal title over. Property can be tangible items, such as houses, cars, or appliances, or it can refer to intangible items that carry the promise of future worth, such as stock and bond certificates.

What is property definition for dummies? ›

Derived from the Latin proprius, meaning “one's own,” “property” refers to anything owned by an individual, an institution, or the state. It also refers to the legal relationships established by government to regulate ownership, because rights to property are rights that are based on custom or on law.

What are the three types of property rights? ›

A property owner in California enjoys a number of rights collectively known as the “bundle of rights.” These five rights associated with owning real property are: (1) possession; (2) control; (3) exclusion; (4) enjoyment and (5) disposition.

What is classification properties? ›

Classification properties are used to assign values to files within a specified folder or volume. There are many property types that you can choose from, depending on your needs. The following table defines the available property types. Expand table. Property.

What are the three common ways to describe property? ›

There are three main systems used to write the legal description of a property. These include the Rectangular Survey System, metes and bounds, and lot and block. The Rectangular Survey System is most often used to describe large areas for governmental purposes.

What are the three types of property quizlet? ›

Intangible property is property that can not be touched (stocks, bonds, patents, and copyrights). Tangible property consists of two categories, real property and personal property. Real property includes land, houses, and and anything permanently attached to land or a house.

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