NORTH CAROLINA GENERAL ASSEMBLY

1979 SESSION

 

 

CHAPTER 686

HOUSE BILL 1198

 

 

AN ACT TO PREVENT DOUBLE TAXATION OF PROPERTY BELONGING TO HOMEOWNERS ASSOCIATIONS.

 

The General Assembly of North Carolina enacts:

 

Section 1.  Chapter 105 of the General Statutes is amended by adding a new section to read as follows:

"§ 105-277.8.  Taxation of homeowners association properties. — (a) The following properties are designated a special class of property under Article V, Section 2(2) of the North Carolina Constitution, and shall be appraised, assessed, and taxed as hereinafter provided:

All property, real or personal, owned by a nonprofit association, corporation, or similar nonprofit organization, as herein defined, shall be assessed for tax purposes on the basis of a nominal value if:

(1)        all property owned by said association or corporation is held for the use, benefit, and enjoyment of all members of said association equally;

(2)        each member of the association or corporation owns or possesses an easement, license, or other nonrevokable right for the use and enjoyment on an equal basis for all the property so held by such association or corporation, subject to any restrictions imposed by the instruments conveying such right or interest or granting such easement and any rules, regulations, or bylaws imposed by the association or corporation pursuant to the authority granted by the articles of incorporation, declaration of covenants, conditions and restrictions, the bylaws, or the articles of association of such corporation or association; and

(3)        each easement, license, or other nonrevokable right to the use and enjoyment of all association property is appurtenant to and an integral part of the taxable real property owned by such members.

(b)        In appraising individual properties owned by members of the association or corporation who are entitled to the use and enjoyment of facilities owned by the association or corporation, the enhanced value of the individual properties because of the right to the use and benefit of the facilities shall be a factor taken into consideration by the appraiser.

(c)        A nonprofit association, corporation, or other organization shall qualify for the benefits provided in this section only if:

(1)        such association or corporation is engaged in residential real estate management;

(2)        such association or corporation is organized and operated to provide for the acquisition, construction, management, maintenance, and care of property nominally owned by such association or corporation and held for the use, benefit, and enjoyment of its members;

(3)        sixty percent (60%) or more of the gross income of such association or corporation consists of amounts received as membership dues, fees, or assessments from owners of residences or residential lots within the area subject to jurisdiction and assessment power of such association or corporation;

(4)        ninety percent (90%) or more of the expenditures of the association or corporation is made for the purpose of acquiring, constructing, managing, maintaining, and caring for the property nominally held by such association or corporation;

(5)        all members of the association or corporation own easement, license, or other nonrevokable rights for the use and enjoyment on an equal basis of all the property nominally owned by such association or corporation subject to any restrictions imposed by the instruments conveying such right or interest or granting such easement and any rules, regulations, or bylaws imposed by the association or corporation pursuant to the authority granted by the articles of incorporation, declaration of covenants, conditions and restrictions, the bylaws, or the articles of association of such corporation or association;

(6)        no part of the net earning, if any, of such association or corporation shall inure to the benefit of any member or individual, other than by acquiring, constructing, or providing management, maintenance, and care of association or corporation property, or other than by a rebate of excess membership dues, fees, or assessments; and

(7)        such nonprofit corporation, association, or organization shall qualify for treatment as a homeowners association under 26 U.S.C. 528, 'Certain Homeowners Associations'."

Sec. 2.  This act shall become effective January 1, 1980.

In the General Assembly read three times and ratified, this the 29th day of May, 1979.