Your shows possession — your coat, your idea. You're is a contraction of "you are" — you're late. The test never fails: read the sentence with "you are" in place. If it still works, you need you're with the apostrophe.
The core difference
A possessive and a contraction, distinguished by one apostrophe.
- your — belonging to you: your turn, your car.
- you're — you are: you're right, you're going to love this.
The test that always works
Expand the contraction. "You're coat is nice" becomes "you are coat is nice", which is obviously wrong — so it needs your. "Your welcome" becomes "your welcome", which says nothing — the phrase is you're welcome, meaning you are welcome.
Why it happens at all
They are pronounced identically in ordinary speech, so the error is purely written. It is also the kind of mistake that happens while typing fast rather than from not knowing — which is why proofreading catches it better than learning does.
The apostrophe rule
The apostrophe marks the missing letter — the A of "are". Possessive pronouns never take an apostrophe: your, his, her, its, our, their. That rule covers this pair and its vs it's at the same time.
Frequently asked questions
Is it "your welcome" or "you're welcome"?
You're welcome — it means "you are welcome".
What is the quickest test?
Replace it with "you are". If the sentence still works, use you're.
Why do possessive pronouns have no apostrophe?
Because the apostrophe marks a missing letter in a contraction. Your, his, her, its, our and their are already possessive.