Personal property is generally defined as property not permanently affixed to or a part of realty. Everything that is not real estate is considered personal property. The tax assessing official makes the differentiation between real property and personal property by considering the manner in which property is attached to or secured at the location and the purpose for which the property is used.
Personal property has two categories: Tangible personal property and Intangible personal property.
Intangible personal property includes an owners representation of rights to property such as shares of stock, annuities, patents, market certificates, etc. Intangible personal property owned by businesses is not taxable under the property tax laws of this state.
Tangible personal property includes material items such as machinery and equipment, tools, furniture and fixtures among numerous other items. Tangible personal property is taxable to businesses for Alabama property tax purposes. Aircraft and avionics equipment is taxable for business personal property in the State of Alabama, as well as, motor vehicle “add-on” equipment. The values published by the Department of Revenue in the Alabama Uniform Motor Vehicle Assessment Schedule for Ad Valorem Taxes represent market value of motor vehicle cab and chassis only and do not include equipment and/or bodies added after a vehicle leaves the manufacturer. The “add-on” equipment and/or bodies are components, which give the vehicle added value and they are taxed as business personal property.
Business personal property is considered Class II property and is taxed at 20% of market value. Market value multiplied by twenty percent equals the assessment value, which is then multiplied by the appropriate jurisdiction’s millage rates to determine the amount of tax due. The State of Alabama publishes a personal property appraisal manual so that basic methods and procedures can be followed in the personal property appraisal process. This is done to ensure statewide property appraisal equity and the manual serves as a reference guide to Alabama’s assessing and appraisal personnel.
The State of Alabama is a situs state for the taxability of personal property; therefore, if property is located in the state on October 1 (the lien date), the property is taxable unless specifically exempted. The State of Alabama has constitutional and statutory exemptions. If you have any questions regarding taxability of personal property, exemptions or millage rates, please call our office at 334-242-1525.
For more information regarding personal property, view our Faq's page.