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 determines whether property is real property or personal property by considering the manner in which it is attached to or secured to the land and the purpose for which the property is used.
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), then the property is taxable unless specifically exempted. Alabama has constitutional and statutory exemptions. If you have any questions regarding taxability of personal property, call 334-242-1525.
Refer to the Administrative Rules for more detailed standards and requirements.
Value Assessment
The Property Tax Division of the Alabama Department of Revenue (ALDOR) has established procedures in the Alabama Personal Property Appraisal Manual for determining market value and assessed value of personal property. All counties in Alabama use this manual to achieve uniformity. The type of business, type of equipment, acquisition year, and acquisition date are all used in valuation of personal property. For example, computer equipment depreciates more quickly than pieces of office furniture.
Reporting Personal Property
Every individual, firm, or corporation owning business personal property in Alabama on October 1 of each year is required to report personal property. Any individual, firm, or corporation owning aircraft based in Alabama, regardless of use, and any individual firm or corporation that purchases a permanent trailer tag for a tractor trailer, truck trailer, or semi-trailer is required to report them as personal property.
A complete itemized listing of all personal property owned on October 1 must be provided to the local assessing official in the taxing jurisdiction in which the property is located. This list must be submitted between October 1 and December 31 of each year to avoid penalty. The list must include a description of the property along with its acquisition date and cost.
Aircraft based in Alabama are subject to property tax and are assessed by ALDOR. Property tax is collected by the county in which the aircraft is based. Aircraft property tax returns should be filed annually between October 1 and December 31. Currently, electronic filing of aircraft returns is not available. Fillable returns are available on the Forms tab of the ALDOR website, form number ADV-ACR45. For assistance with filing aircraft returns, call 334-242-1525.
Personal Property Categories
- Intangible personal property includes an owner’s 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, and other items used in a business activity. Tangible personal property is taxable to businesses for Alabama property tax purposes. Aircraft and avionics equipment is taxable as personal property in Alabama, as well as motor vehicle add-on equipment. The values published by ALDOR in the Alabama Add-On Guide represent the value of motor vehicle cab and chassis only and do not include equipment or bodies added after a vehicle leaves the manufacturer. The add-on equipment or bodies are components, which give the vehicle added value, and they are taxed as business personal property.
Tangible Personal Property
Personal property is considered Class II property and is taxed at 20 percent of market value. Market value multiplied by 20 percent equals the assessment value, which is then multiplied by the appropriate jurisdiction’s millage rates to determine the amount of tax due. Alabama publishes a personal property appraisal manual to serve as a reference guide to Alabama’s assessing and appraisal personnel so that basic methods and procedures can be followed and equity in statewide property appraisal can be ensured.