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What Is Personal Property?
Personal property refers to an individual's useful or valuable properties other than the properties like land, building, and immovable properties on it. The items are generally movables and examples include furniture, electronic appliances, stocks, collectibles, and cars.
It is also known as movable properties, movables, and chattels. The items falling in the movables class can exhibit contrasting characteristics. For example, movables like vehicles and furniture depreciate over time, whereas collectibles like antiques appreciate. Furthermore, there exist low-priced movables and high-priced movables.
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- Personal property refers to assets that are not permanently fixed to the land or building. Hence, they are generally movable items.
- They are valuable, useful, or precious items. The two types are intangible and tangible items.
- It can be pledged as security for the lender while procuring a loan. The lender evaluates the value of the borrower's property to determine the loan amount.
- It is different from real property, and private property since real property indicates immovable assets like land and building. On the other hand, private properties are movable or immovable items generating capital for the owner.
Personal Property Explained
Personal properties are generally movable properties that do not have fixed positions. It can be moved from one location to the other; for example, vehicles, home appliances, and gold are belongings that can be easily moved to different locations.
They are valuable or priced possessions, so they can be used as collateral while borrowing from lenders. The lender assesses the value of the borrower's precious items to determine the corresponding loan amount.
Certain personal belongings also get insurance coverage when their owner buys a homeowner insurance policy that includes insurance cover not only on the house, its attached structures, and standalone structures but also the personal items such as paintings and jewelry; in other words, the insurance pays to repair or replace stolen or damaged belongings in the house.
Personal properties attract tax. Numerous jurisdictions in the United States have levied a yearly tax on the ability to own or possess personal property within the jurisdictional limits. As long as they are utilized or maintained within the home, most domestic items are exempt. There is a big difference between tangible and intangible personal property in certain countries where sales taxes are levied. For instance, in some locations, sales of tangible personal property were subject to provincial and federal sales taxes, but sales of intangibles were often excluded.
Types
It is broadly classified into tangibles and intangibles:
- Intangibles: Intangible personal property is any type that cannot be relocated, touched, or felt physically but reflects something valuable, such as stocks.
- Tangibles: Any personal property that can typically be transported, touched, or felt is referred to as tangible personal property. These often consist of things like furniture, clothing, and jewelry.
Personal Property Security Act (PPSA)
PPSA's main goal is to spur economic growth. It achieves this by making credit application processes simpler and less expensive. As a result, increasing credit availability stimulates the economy, which inevitably results in the creation of jobs and an expansion of the tax base.
A PPSA functions by offering the option to use a movable property as loan collateral. It is done by creating "security interests" in movable collateral. Then, these security interests are entered into a centralized electronic registry for others to determine whether a proposed borrower has previously pledged specific collateral to secure a previous loan.
The Personal Properties Securities Act of 2013 aims to establish the following:
(a) Creation of security interests in movable property;
(b) Prioritization of competing interests in movable property;
(c) Creation of a public filing office where notices of security interests may be filed and where they are publicly available for inspection;
(d) Simplified, expedited enforcement against collateral when debtors default;
(e) Repeal of the Chattels Transfer Act 1975 and amendment of other relevant Acts;
(f) Matters incidental to the above.
Examples
Let us look at personal property examples to understand the concept better:
- Miss Franklin has jewelry worth $50,000, which she keeps as tangible personal property. Jewelry is a valuable and immovable property possessed by Franklin as an asset. She goes to the insurance service company to insure her jewelry in case of theft/ damage due to any mishap. The insurance service provider asks her to take scheduled personal property insurance in case she wants insurance coverage of a higher amount for the jewelry. Scheduled personal property is an insurance policy providing additional coverage as a means of enhancement by extending coverage beyond the standard protection offered by the homeowners' insurance policy.
- Collectibles are another example of personal property. Examples of collectibles include stamps, cars, non-fungible tokens (NFTs), art, and antiques. The value of the collectible is in the eyes of the collector. Its price increases as the year pass; hence the practice of investing in collectibles is also increasing.
Real Property vs Personal Property vs Private Property
- Real property is an immovable property. It includes land, fences, plants, buildings, etc., attached and not easily movable.
- Personal property is movable; it includes things that can be moved from one place to another, such as clothes, home appliances, electronic gadgets, livestock, etc. In Marxist theory, it points to consumer and non-capital goods and services.
- Private property is anything that has an exchange value. It includes machinery, labor, and other equipment an individual uses to build wealth. In other words, it is generally the capital or the means of production.
| Personal Property | Private Property | Real Property |
|---|---|---|
| Movable | Immovable or movable | Immovable |
| Consumer and non-capital goods and services | Capital or the means of production | Land and things permanently attached to it |
| Usually, personal use items | Items generating capital for the owner | Real estate is synonymous with real property, and the owner can possess, sell, or lease it |
| Examples: Clothes, vehicles | Examples: Artifacts, factories & mines | Examples: Land & building |
Frequently Asked Questions (FAQs)
It includes the movable properties valuable to the owner or the properties not attached to the real estate property, like land, and is easily movable. It can be tangible and intangible, including electronic gadgets, appliances, furniture, jewelry, stocks, etc.
It is the tax that state or municipal governments levy on certain personal belongings that citizens possess. The government uses tax revenue collected through it to finance public infrastructure projects like roads and schools.
It is also known as Coverage C, which covers the insured's personal properties, given exceptions apply. Generally, it accompanies other insurances like homeowner's insurance, renters insurance, or condo policy. The furniture, clothing, appliances, and other items in the house, rental property, or condo are all covered by Coverage C. In addition, the insurance provider will pay to repair or replace personal belongings up to the amount specified in the policy for this coverage if they are damaged or stolen due to a covered risk.
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This has been a guide to what is Personal Property. We explain its types, examples, and comparisons with private property and real property. You can learn more about it from the following articles -
