GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2017

H D

HOUSE BILL DRH10070-MC-45 (02/01)

Short Title: Displaced Residential Land Tax Deferral.		(Public)
Sponsors:	Representatives Millis, Howard, and Warren (Primary Sponsors).
Referred to:

A BILL TO BE ENTITLED

AN ACT to create a property tax deferral program for permanent residences that are subsequently rezoned for nonresidential uses.

The General Assembly of North Carolina enacts:

SECTION 1. Article 12 of Subchapter II of Chapter 105 of the General Statutes is amended by adding a new section to read:

"§ 105‑277.15B. Taxation of displaced residential land.

(a) Classification. – Displaced residential land is designated a special class of property under Section 2(2) of Article V of the North Carolina Constitution and must be appraised, assessed, and taxed in accordance with this section. For purposes of this section, "displaced residential land" means a person's legal residence, including the dwelling, the dwelling site, and related improvements. The dwelling may be a single‑family residence, a unit in a multifamily residential complex, or a manufactured home.

(b) Requirements. – Property qualifies as displaced residential land if it meets the following requirements:

(1) The dwelling site was not zoned for a particular use or was zoned for residential use.

(2) Prior to the time the dwelling site was zoned or during the time the dwelling site was zoned for residential use, a permanent residence was constructed on the dwelling site.

(3) The dwelling site was zoned after construction of the permanent residence for a use other than residential use.

(4) The owner of the dwelling site was the owner at the time of the zoning for a use other than residential use.

(c) Deferred Taxes. – An owner may defer a portion of tax imposed on displaced residential land that represents the sum of the difference between the true value of the displaced residential land as it is currently zoned and the value of the displaced residential land as if it were zoned for residential use.

The difference between the taxes due under this section and the taxes that would have been payable in the absence of this section is a lien on the displaced residential land as provided in G.S. 105‑355(a). The difference in taxes for the three fiscal years preceding the current tax year shall be carried forward in the records of each taxing unit as deferred taxes. The deferred taxes are due and payable in accordance with G.S. 105‑277.1F when the displaced residential land loses its eligibility for deferral because of the occurrence of a disqualifying event. A disqualifying event occurs when the owner ceases to use the displaced residential land as a permanent residence, unless the cessation is due to any of the following:

(1) Temporary absences, as defined in G.S. 105‑177.1(a1).

(2) Death of the owner, if the subsequent owner is the spouse or child of the owner and uses the residence as a permanent residence. If the subsequent owner ceases to use the residence as a permanent residence, the displaced residential land loses its eligibility for deferral.

(3) Divorce of the owner, if the subsequent owner is the spouse of the owner and uses the residence as a permanent residence. If the subsequent owner ceases to use the residence as a permanent residence, the displaced residential land loses its eligibility for deferral.

(d) Notice. – On or before September 1 of each year, the collector shall notify each owner to whom a tax deferral has previously been granted of the accumulated sum of deferred taxes and interest. An owner who fails to notify the county assessor when land classified under this section loses its eligibility for classification is subject to a penalty in the amount set in G.S. 105‑277.5.

(e) Application. – An application for property tax relief provided by this section should be filed during the regular listing period but may be filed after the regular listing period upon a showing of good cause by the applicant for failure to make a timely application, as determined and approved by the board of equalization and review or, if that board is not in session, by the board of county commissioners. An untimely application approved under this subsection applies only to property taxes levied by the county or municipality in the calendar year in which the untimely application is filed. Decisions of the county board may be appealed to the Property Tax Commission. Persons may apply for this property tax relief by entering the appropriate information on a form made available by the assessor under G.S. 105‑282.1."

SECTION 2. G.S. 105‑277.1F(a) is amended by adding a new subdivision to read:

"(4c) G.S. 105‑277.1B, displaced residential land."

SECTION 3. G.S. 105‑282.1(a) reads as rewritten:

"(a) Application. – Every owner of property claiming exemption or exclusion from property taxes under the provisions of this Subchapter has the burden of establishing that the property is entitled to it. If the property for which the exemption or exclusion is claimed is appraised by the Department of Revenue, the application shall be filed with the Department. Otherwise, the application shall be filed with the assessor of the county in which the property is situated. An application must contain a complete and accurate statement of the facts that entitle the property to the exemption or exclusion and must indicate the municipality, if any, in which the property is located. Each application filed with the Department of Revenue or an assessor shall be submitted on a form approved by the Department. Application forms shall be made available by the assessor and the Department, as appropriate.

Except as provided below, an owner claiming an exemption or exclusion from property taxes must file an application for the exemption or exclusion annually during the listing period.

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(2) Single application required. – An owner of one or more of the following properties eligible for a property tax benefit must file an application for the benefit to receive it. Once the application has been approved, the owner does not need to file an application in subsequent years unless new or additional property is acquired or improvements are added or removed, necessitating a change in the valuation of the property, or there is a change in the use of the property or the qualifications or eligibility of the taxpayer necessitating a review of the benefit.

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c. Special classes of property classified for taxation at a reduced valuation under G.S. 105‑277(h), 105‑277.1, 105‑277.1C, 105‑277.10, 105‑277.13, 105‑277.14, 105‑277.15, 105‑277.15B, 105‑277.17, or 105‑278.

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SECTION 4. This act is effective for taxes imposed for taxable years beginning on or after July 1, 2017.