The answer to the question “What is personalty and what is realty?” is critical in almost all tangible asset property appraising. For insurance appraising the buildings vs. contents treatment may be rate related. In purchase price allocations (financial and/or income tax reporting) the life of the assets may well follow their classification, thereby affecting earnings. In cost segregation situations the answer is critical to the assets treatment under 39-, 15-, 7- or 5-year lives, affecting cash flow through accelerated depreciation. In property taxation again the tax rates may differ depending on the classification, or personalty may not be taxed at all. So it is important to understand the difference in each type of situation. Generally for insurance the buildings are usually considered the major structures, with equipment sheds being considered personalty. The same classification process may well apply to purchase price allocations. For example, a shed that houses an air compressor is attached to the main building. This shed (called an equipment enclosure) is personalty. Be aware, this shed could be very small, say 10’ x 10’, or it could be large, say 10’ x 50’, but no matter. The same example may apply to process electrical equipment enclosures. This appraiser recently listed one such structure that was 40’ wide by 150’ long. It housed only buzzing equipment gear. There were no lavatories, no windows, no emergency doors, inadequate personal comfort HVAC, and certainly not any noise abatement. Therefore, it is an equipment enclosure which has a shorter life than a building structure that may have other uses. A last example is the telephone switchgear structures one may see along the road in rural America. These are equipment housings. The Ad Valorem tax assessor may consider things differently and in fact may well differ from one taxing authority to another. Usually such professionals prefer to include anything attached to the land as a building. In many cases the realty mileage rate and the calculations of tax are higher for the realty, and in many cases there is not a tax on personalty, so more is designated as realty. Such variances may be quite minor, but in many cases this classification is a very contentious issue with significant tax dollars being at stake. This appraiser’s answer is rather simplistic (other than relating to cost segregation matters) in that any structure that relates to the particular business in place is personalty. From another perspective, change the business user of the realty and determine what will likely remain and what will be taken away and/or abandoned. Anything remaining is realty. Yes there still are gray area items and there always will be, regardless of the demarcation thought, but perhaps these thoughts on possible classification of real property vs. personal property will help. And when in doubt it is personalty, being most often the advantageous and conservative answer.