Real Property

Real property refers to permanent, tangible assets like land and attached assets that are immovable and remain intact with it permanently. In contrast, attached assets must be anchored firmly to the ground or buried there. It has the primary purpose of determining the natural person having ownership interest over the property who can also benefit from it.

It allows the owner to lease, own, use for entertainment, or sell it at any price at any time. It comes in various categories like residential, agricultural, and commercial properties. It is concerned with the advantages and needs of such human actions. It grants the owner a bundle of five different rights.

Real property means the ground and, therefore, any structures linked to it that will be considered part of the property's value in the market. It also comprises all the rights concerning the property getting transferred to the owner. Real property confers many bundle rights to the owner, like:

• Right of possession of the property without any legal interference
• Right to enjoy and utilize the property at will while staying within the law
• Right to the exclusion of entry and trespassing into the property by others without permission
• Right to control over the property staying within the limits of the law
• Right of disposition like selling, willing, transferring, and leasing or disposing of the property.

Moreover, real property has wide varieties that benefit real estate investors according to their degree of investment and perspectives, which come under natural property management. One may focus on only the residential category with multi-family homes or may even invest in factories, stores, ranches, or office spaces. One has to know the types of real property by using accurate property searches & real property numbers to decide upon their investment, which are of mainly six types:

• Residential: These properties are built for residential purposes and comprise different types of houses, Cape Cod style, and other types. These houses fulfill the basic family housing needs of people. They provide home ownership to the people with the bundle of rights under the law.
• Commercial: All those properties are acquired for commercial activities like office spaces, shopping malls, hotel parking, and entertainment avenues.
• Agricultural: These properties are mainly used and reserved for agricultural purposes only, like farms, timberlands, ranches, and orchards.
• Industrial: Although the least known and rare types, these properties also form the backbone of an economy. Factories, powerplants, and warehouses come under it. 
• Special Use: All publicly held and public-use properties include churches, public libraries, cemeteries, parks, and schools. 
• Mixed-Use: It can be used for dual purposes, for commercial and residential purposes, within the same property. Many malls also have residential flats attached to them.

Let us use a few examples to understand the topic.

Example #1 

Real property can include land, houses, detached garages, patios, swimming pools, and other permanent structures. Real property also includes undeveloped land that has natural resources like crops attached to it.

Example #2

According to an article, the U.S. General Services Administration (GSA) makes surplus property available to other federal agencies that might require it for a program. The property may be transferred to another federal agency in the event that the agency determines there is a need. 

State and local governments, regional agencies, and non-profit organizations may make federal real estate properties available for public use if the federal government no longer needs them. In addition to being used for public health and education, these properties can also be used for law enforcement, self-help housing, parks, recreational areas, historical monuments, correctional facilities, homeless assistance, highways, wildlife conservation, and emergency management response. The relevant authorities are informed about the property's final use by the appropriate regional office.

Real property tax (RPT), also called amilyar, gets levied as a tax on those properties actually owned by a person. The real property gets taxed just like real estate. IRS of the United States may levy ten thousand dollars for joint property taxes and five thousand for single property tax under state and local taxes. Moreover, the United States Internal Revenue Code states under section 1250 that the IRS has the power to levy taxes on every gain obtained from sale transactions of deprecated real property, just like any other income. 

This happens only when the total depreciation breaches the depreciation determined using the straight-line method. IRS is able to know about all real property transactions because any sale or purchase of real property handled by a title company dealing with the closure of the deal has to fill out form 1099 transmitting the sales price to the IRS.

Nevertheless, all properties falling under the particular use, improvements in lands, or buildings either directly or indirectly remain outside the tax net of the IRS. One can get tax-exempt on a second property. Moreover, RPT is considered an ad-valorem tax, which is based on the fixed ratio of a property's value. For instance, the Maryland Department of Assessments and Taxation helps in Maryland real property searches.

Let us discuss the differences between the two using the table below: