Builders Property Tax Exclusion (NCGS 105-277.02)
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 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:
- Subdivision of a parcel for future residential construction.
- Non-structural improvements (grading, street, utilities, etc.) for future residential construction.
- 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 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.