GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2009

H                                                                                                                                                   D

HOUSE DRH50214-MC-111  (2/26)

Short Title:        Defer Tax on Builders' Inventory.		(Public)
Sponsors:	Representatives Dickson, Brubaker, and Holliman (Primary Sponsors).
Referred to:

A BILL TO BE ENTITLED

AN ACT to defer the property tax due on real property held for sale by a builder.

The General Assembly of North Carolina enacts:

SECTION 1.  G.S. 105-273 is amended by adding a new subdivision to read:

"(3a) "Builder" means a taxpayer engaged in the business of buying real property, making improvements to it, and then reselling it."

SECTION 2.  Article 12 of Chapter 105 of the General Statutes is amended by adding a new section to read:

"§ 105-277.1D.  Inventory property tax deferral.

(a) Classification. - A residence owned by a builder is designated a special class of property under Section 2(2) Article V of the North Carolina Constitution and is taxable in accordance with this section. For purposes of this section, a "residence" is an improvement to real property which is intended to be sold and used as an individual's residence and for which a certificate of occupancy authorized by law has been issued.

(b) Deferred Taxes. - A builder may defer the portion of tax imposed on real property that represents the increase in value of the property attributable to improvements resulting from the construction of a residence on the property. 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 for the fiscal years preceding the current tax year shall be carried forward in the records of the taxing unit or units as deferred taxes. The deferred taxes are due and payable in accordance with G.S. 105-277.1F when the property loses its eligibility for deferral because of the occurrence of a disqualifying event. A disqualifying event occurs at the earlier of (i) when the owner transfers the residence or (ii) five years from the time the improved property was first subject to being listed for taxation by the builder. On or before September 1 of each year, the collector shall notify each residence owner to whom a tax deferral has previously been granted of the accumulated sum of deferred taxes and interest.

(c) Creditor Limitations. - A mortgagee or trustee that elects to pay any tax deferred by the builder 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 builder from deferring taxes on property under this section is void.

(d) Construction. - This section does not affect the attachment of a lien for personal property taxes against a tax-deferred residence.

(e) 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."

SECTION 3.  G.S. 105-277.1F(a) is amended by adding a new subdivision to read:

"(2a) G.S. 105-277.1D, the inventory property tax deferral."

SECTION 4.  This act is effective for taxes imposed for taxable years beginning on or after July 1, 2009.