North Carolina § 105-277 - 1B. Property tax homestead circuit breaker.

§ 105-277. 1B. Property tax homestead circuit breaker.

Classification. - A permanent residence owned and occupied by a qualifying owner is designated a special class of property under Article V, Section 2(2) of the North Carolina Constitution and is taxable in accordance with this section. Definitions. - The definitions provided in G.S. 105-277.1 apply to this section. Income Eligibility Limit. - The income eligibility limit provided in G.S. 105-277.1(a2) applies to this section. Qualifying Owner. - For the purpose of qualifying for the property tax homestead circuit breaker under this section, a qualifying owner is an owner who meets all of the following requirements as of January 1 preceding the taxable year for which the benefit is claimed: The owner has an income for the preceding calendar year of not more than one hundred fifty percent (150%) of the income eligibility limit specified in subsection (c) of this section. The owner has owned the property as a permanent residence for at least five consecutive years and has occupied the property as a permanent residence for at least five years. The owner is at least 65 years of age or totally and permanently disabled. The owner is a North Carolina resident. Multiple Owners. - A permanent residence owned and occupied by husband and wife is entitled to the full benefit of the property tax homestead circuit breaker notwithstanding that only one of them meets the length of occupancy and ownership requirements and the age or disability requirement of this section. When a permanent residence is owned and occupied by two or more persons other than husband and wife, no property tax homestead circuit breaker is allowed unless all of the owners qualify and elect to defer taxes under this section. Tax Limitation. - A qualifying owner may defer the portion of the principal amount of tax that is imposed for the current tax year on his or her permanent residence and exceeds the percentage of the qualifying owner's income set out in the table in this subsection. If a permanent residence is subject to tax by more than one taxing unit and the total tax liability exceeds the tax limit imposed by this section, then both the taxes due under this section and the taxes deferred under this section must be apportioned among the taxing units based upon the ratio each taxing unit's tax rate bears to the total tax rate of all units. Temporary Absence. - An otherwise qualifying owner does not lose the benefit of this circuit breaker because of a temporary absence from his or her permanent residence for reasons of health, or because of an extended absence while confined to a rest home or nursing home, so long as the residence is unoccupied or occupied by the owner's spouse or other dependent. Deferred Taxes. - The difference between the taxes due under this section and the taxes that would have been payable in the absence of this section are a lien on the real property of the taxpayer as provided in G.S. 105-355(a). The difference in taxes must be carried forward in the records of each taxing unit as deferred taxes. The deferred taxes for the preceding three fiscal years are due and payable in accordance with G.S. 105-277.1F when the property loses its eligibility for deferral as a result of a disqualifying event described in subsection (i) of this section. On or before September 1 of each year, the collector must send to the mailing address of a residence on which taxes have been deferred a notice stating the amount of deferred taxes and interest that would be due and payable upon the occurrence of a disqualifying event. Disqualifying Events. - Each of the following constitutes a disqualifying event: The owner transfers the residence. Transfer of the residence is not a disqualifying event if (i) the owner transfers the residence to a co-owner of the residence or, as part of a divorce proceeding, to his or her spouse and (ii) that individual occupies or continues to occupy the property as his or her permanent residence. The owner dies. Death of the owner is not a disqualifying event if (i) the owner's share passes to a co-owner of the residence or to his or her spouse and (ii) that individual occupies or continues to occupy the property as his or her permanent residence. The owner ceases to use the property as a permanent residence. Gap in Deferral. - If an owner of a residence on which taxes have been deferred under this section is not eligible for continued deferral for a tax year, the deferred taxes are carried forward and are not due and payable until a disqualifying event occurs. If the owner of the residence qualifies for deferral after one or more years in which he or she did not qualify for deferral and a disqualifying event occurs, the years in which the owner did not qualify are disregarded in determining the preceding three years for which the deferred taxes are due and payable. Repealed by Session Laws 2008-35, s. 1.2, effective July 1, 2008. Creditor Limitations. - A mortgagee or trustee that elects to pay any tax deferred by the owner of a residence subject to a mortgage or deed of trust does not acquire a right to foreclose as a result of the election. Except for requirements dictated by federal law or regulation, any provision in a mortgage, deed of trust, or other agreement that prohibits the owner from deferring taxes on property under this section is void. Construction. - This section does not affect the attachment of a lien for personal property taxes against a tax-deferred residence. Application. - An application for property tax relief provided by this section should be filed during the regular listing period, but may be filed and must be accepted at any time up to and through June 1 preceding the tax year for which the relief is claimed. 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. Income Over Income Up To Percentage -0- Income Eligibility Limit 4.0% Income Eligibility Limit 150% of Income Eligibility Limit 5.0% History (2007-484, s. 43.7T(b); 2007-497, s. 2.3; 2008-35, s. 1.2; 2009-445, s. 22(b).) Editor's Note. - Session Laws 2007-497, s. 2.6, as amended by Session Laws 2007-484, s. 43.7T(b), made this section effective for taxes imposed for taxable years beginning on or after July 1, 2009. This section was amended by Session Laws 2008-35 in the coded bill drafting format set out in G.S. 120-20.1 . In subdivision (i)(2), in the second numbered clause, the word "residence" was apparently inadvertently reinserted. The error was corrected by Session Laws 2009-445, s. 22(b). Session Laws 2008-107, s. 28.11(h), provides, in part, that the Revisor of Statutes is authorized to correct any reference or citation in the General Statutes to any portion of Session Laws 2008-35 that is recodified or amended by Session Laws 2008-107, s. 28.11(h) by deleting incorrect references and substituting correct references. The reference in subsection (h) to G.S. 105-277.1 C has been changed to G.S. 105-277.1 F. Session Laws 2008-107, s. 1.2, provides: "This act shall be known as 'The Current Operations and Capital Improvements Appropriations Act of 2008'." Session Laws 2008-107, s. 30.3, provides: "Except for statutory changes or other provisions that clearly indicate an intention to have effects beyond the 2008 2009 fiscal year, the textual provisions of this act apply only to funds appropriated for, and activities occurring during, the 2008 2009 fiscal year." Session Laws 2008-107, s. 30.5 is a severability clause. Session Laws 2021-16, s. 1.1, provides: "For purposes of determining a person's eligibility under the elderly or disabled property tax homestead exclusion, G.S. 105-277.1 , and the property tax homestead circuit breaker, G.S. 105-277.1 B, Extra Credit Grants and COVID-19 Recovery Rebates are not considered income. For purposes of this section, COVID-19 Recovery Rebates are the following: "(1) Payments received under section 6428 of the Internal Revenue Code. "(2) Payments received under section 6428A of the Internal Revenue Code. "(3) Any similar relief payments to those listed in subdivisions (1) and (2) of this section received by an individual from the federal government due to the COVID-19 pandemic." Effect of Amendments. - Session Laws 2008-35, s. 1.2, effective for taxes imposed for taxable years beginning on or after July 1, 2008, rewrote the section. Session Laws 2009-445, s. 22(b), effective for taxes imposed for taxable years beginning on or after July 1, 2009, in subdivision (d)(2), deleted "and occupied" following "owner has owned" and substituted "five consecutive years and has occupied the property as a permanent residence for at least five years" for "five years"; in subsection (e), in the first sentence, deleted "as tenants by the entirety" following "husband and wife" and substituted "length of occupancy and ownership requirements" for "occupation requirement"; in subsection (f), substituted "the principal amount of tax that is imposed for the current tax year on his or her permanent residence and" for "tax imposed on his or her permanent residence if it"; rewrote subsection (h); in subdivision (i)(2), deleted "residence" following "his or her spouse"; and rewrote subsection (j).