Real property vs. personal property: What to know

Legally speaking, property can be categorized into multiple categories: real property, personal property and intellectual property. For this article we will focus on real property vs. personal property. That might seem a little confusing, because your personal property feels real to you, and real property matters can sometimes get personal. In the eyes of the law, however, there’s a clear distinction. Understanding the difference between real property vs. personal property may help homeowners make informed decisions when it comes to matters like taxation or estate planning. Let’s learn more about each.

Do note that this guide is meant to provide a general understanding of two concepts and is not meant to be taken as legal advice. If you are having a legal issue with your real or personal property, do reach out to a legal professional for advice.

What is real property?

Before we define real property, let’s begin with what’s likely to be a more familiar concept: land. Real estate refers to land and anything permanently attached to that land. If you combine land, real estate and ownership, it’s an example of real property.

Real property encompasses legal rights associated with owning real estate and is typically impacted by how it’s used. If the property is residential, commercial, agricultural, industrial or used for some other purpose, real property may have a slightly different meaning as it relates to what is then considered real property and what someone’s rights are associated with it.

Real property is everything included in real estate, plus the rights of ownership. In addition to the physical land and structures permanently attached to that land, real property includes:

• The right to enjoy your property, also known as the right of enjoyment.
• The right to control access to your property, also known as the right of exclusion.
• The right to live on the property, also known as the right of possession.
• The right to transfer property ownership to another party, also known as the right of disposition.
• The right to make legal decisions pertaining to the property, like leasing out or building on your property, also known as the right of control.

Essentially, real property is more a holistic concept than real estate. Real property encompasses the benefits, rights and interests that come with owning real estate.

What is personal property?

Personal property is different than real property. As noted above, real property is land or anything permanently affixed to the land, along with the rights of ownership over that. In a sense, you could say real property is permanently affixed in place.

Personal property is typically any tangible or intangible asset you have ownership of that isn’t real property. It isn’t permanently affixed to a parcel of land. A classic example of tangible personal property is clothing. A classic example of intangible personal property is a bank account.

However, there are some versions of personal property that may be considered real property at a certain point, like fixtures in your home. When you buy a fixture at the hardware store to bring home, in its current state it’d likely be classified as personal property — it’s something you bought on your own and moved from one place to another. Once that fixture is firmly installed in your home, however, it may turn into real property. Alternatively, let’s say you build a detached garage. The materials you purchased from the hardware store are personal property at first. But once the garage is built and attached to your land, all those materials are now likely to be classified as real property.

In summary

Real property and personal property are two distinct classifications as they relate to your property ownership. Real property encompasses land, its permanent structures and the benefits associated. Personal property refers to possessions that may be moved or are not permanently affixed to land. If you’re looking to make an informed decision about your property, do consult a professional for advice.

Real property vs. personal property FAQs

What are some examples of a real property?

Real property is your land, anything growing on it, attached or erected. Buildings, structures, fences and plumbing systems are all examples of real property.

What are some examples of personal property?

Personal property is classified by assets other than real estate. Your clothing, jewelry, electronics, bank and investment accounts are all examples of personal property.

How is real property transferred?

Real property may be transferred through a deed. Consult a legal professional if you’re looking to understand how real property is properly transferred.

Do I need to specify whether something is real property or personal property in my will?

For distribution, ownership rights and other legal consideration, it may be best to specify whether something is real or personal property in your will. Do consult a legal professional before making any final decisions about your will.