Exemptions & Exclusions

Beginning in 2017, this exclusion applies only to property owners who qualify as a builder as defined by NCGS 105-273(3a) which means a taxpayer who is licensed as a general contractor and is engaged in the business of buying real property, making improvements to it, and reselling it.

For both residential and commercial properties, the exclusion may exempt improvements made after January 1 of the current tax year. Because the exclusion is aimed at new construction, renovations or improvements made to an existing residence do not qualify.

A builder must submit a Builder Property Tax Exemption Application to the tax office during the regular listing period, January 1 through January 31. A separate application must be submitted for each parcel of land or building improvement you are requesting to exempt.

Residential Property

Residential property is considered real property that is intended to be sold and used as an individual’s residence immediately after construction of the residence.

The exemption excludes from taxation the increase in property value attributable to:

1. Subdivision of a parcel for future residential construction.
2. Non-structural improvements (grading, street, utilities, etc.) for future residential construction.
3. Construction of a new single-family home or duplex.

To be eligible, the property must continue to be owned by a builder, be held for sale, must not be occupied by a tenant, and must not be used as a model home or for any other commercial purposes. The exclusion is limited to three years from the date the property was first subject to be listed by the builder. Remember that improvements must be as of January 1, regardless of the stage of completion. If a property is improved in stages, each improvement might qualify for a separate exclusion based on its own listing date and a new application may be required for improvements added or removed which necessitates a change in the valuation.

Commercial Property

Commercial property is considered real property that is intended to be sold and used for commercial purposes immediately or after improvement.

Commercial property may benefit from the exclusion for a maximum of five years, but the commercial property exclusion covers only the increase in value attributable to subdivision or non-structural improvements (grading, streets, utilities, etc.). Any improvement that requires the issuance of a building permit terminates eligibility for the exclusion.

NOTE: The builder must apply for any exclusion/exemption under this statute.

An annual review of qualifying property will be conducted to confirm eligibility.

The North Carolina General Assembly, under NCGS 105-277.2, has granted county tax offices the ability to consider the value of specific properties by their present use, or land use, versus market value.

Property taxes in all present-use programs are deferred, meaning that a portion of the taxes become due and payable when a property fails to meet any of the requirements for classification. It is the property owner’s responsibility to notify the tax office of any changes in the size, ownership, use, or income of the property. Deferred tax billing will consist of the current and preceding three years, plus interest.

Currently, there are four programs where the land is valued on the present use: agriculture, horticulture, forestry, and wildlife. Each program has different requirements which you can read about in the Present Use Value Brochure.

To apply for the Agriculture, Horticulture or Forestry Present-use Program, submit FORM AV-5. To apply for the Wildlife Conservation Program, submit FORM AV-56. These forms must be filed with the tax office during the annual listing period, January 1 through January 31.

Additional links:
To make voluntary payment of deferred taxes without disqualification from Present Use Program submit FORM AV-3.
To request voluntary disqualification from the Present Use Program submit FORM AV-6.
To request an estimate of deferred taxes submit FORM AV-7.

Property classified as historical is taxed uniformly in each local taxing unit on the basis of fifty percent (50%) of the true value of the property as determined by statute NCGS 105-278. After a property has been designated as historical property, the owner is required to submit a historical deferment application with the tax office.

The deferred taxes will become due when the property loses its eligibility for the benefit of this classification. This could occur because of a change in an ordinance designation or a change in the property which causes its historical significance to be lost or substantially impaired.

To apply for the Historical Tax Deferment, please submit FORM AV-10 with the tax office during the annual listing period, January 1 through January 31. 

North Carolina General Statutes provide for certain types of property to be exempt from taxation.  Every owner of property claiming exemption or exclusion from property taxes has the burden of establishing that the property is entitled to it and must file an application with the tax office during the annual listing period, January 1 through January 31.

To apply for exemption, you must file FORM AV-10 with the tax office during the annual listing period, January 1 through January 31. Please see the form for a complete list of exemptions.

• Real and personal property used for religious purposes (NCGS 105-278.3)
• Real and personal property used for educational purposes (NCGS 105-278.4)
• Real and personal property of religious educational assemblies used for religious and educational purposes (NCGS 105-278.5)
• Real and personal property used for charitable purposes (NCGS 105-278.6)
• Real and personal property used for educational, scientific, literary or charitable purposes (NCGS 105-278.7)
• Real and personal property used for charitable hospital purposes (NCGS 105-278.8)
• Pollution abatement and/or recycling equipment certified by the NC Department of Environmental Quality (NCGS 105-275(8)). This is a two-step process. Please go to http://www.dornc.com/downloads/property_taxcert.html for complete details.