Deferments

One may hear deferments referred to as use value assessment, present use value, or just simply a "tax break". Properly referred to as use value, the term means the value of land in its current use as agricultural land, horticultural land or forestland, and is based solely on the land's ability to produce income.

There are three basic programs involved in use value:

Agricultural

Agricultural land means land that is a part of a farm unit actively engaged in the commercial production or growing of crops, plants, or animals under a sound management program. Agricultural land can include woodland and wasteland. The requirements for an agricultural deferment are as follows:

• May consist of more than one tract of agricultural land, but at least one of the tracts must meet the requirements and each tract must be under a sound management program.
• One tract must consist of at least 10 acres that are in actual production and are not included in a farm unit.
• Must have produced an average gross income of at least one thousand dollars ($1,000) for the three years preceding January 1 of the year in which this benefit is claimed. Gross income includes income from the sale of the agricultural products produced from the land and any payments received under a governmental soil conservation or land retirement program.
• If individually owned, the property must be the owner's residence or have been owned by the current owner or a relative of the current owner for four years preceding January 1 of the year in which this benefit is claimed.

Forestland

Forestland means land that is part of a forest unit that is actively engaged in the commercial growing of trees under a sound management program. Forestland includes wasteland that is part of the forest unit, but the wasteland included in the unit shall be appraised under the use value schedules as wasteland. The requirements for a forestland deferment are as follows:

• May consist of more than one tract of forestland, but at least one of the tracts must meet the requirements and each tract must be under a sound management program.
• One tract must consist of at least 20 acres that are in actual production and are not included in a farm unit.
• If individually owned, the property must be the owner's residence or have been owned by the current owner or a relative of the current owner for four years preceding January 1 of the year in which the benefit is claimed.

Horticultural

Horticultural land means land that is a part of a horticultural unit that is actively engaged in the commercial production or growing of fruits or vegetables or nursery or floral products under a sound management program. Horticultural land includes woodland and wasteland that is a part of the horticultural unit, but the land included in the unit shall be appraised under the use value schedules as woodland or wasteland. The requirements for a horticultural deferment are as follows:

• May consist of more than one tract of horticultural land, but at least one of the tracts must meet the requirements and each tract must be under a sound management program.
• One tract must consist of at least 5 acres that are in actual production.
• Must have produced an average gross income of at least one thousand dollars ($1,000) for the three years preceding January 1 of the year in which this benefit is claimed. Gross income includes income from the sale of the horticultural products produced from the land and any payments received under a governmental soil conservation or land retirement program.
• If individually owned, the property must be the owner's residence or have been owned by the current owner or a relative of the current owner for four years preceding January 1 of the year in which the benefit is claimed.

If property loses its eligibility for any reason, deferred taxes become due for the current year plus three previous years, plus interest for all prior years. If only a part of the qualifying tract loses its eligibility, a determination shall be made of the amount of deferred taxes applicable to that part, and that amount shall become payable with interest.

Historical Property

Historical property is real property designated as a historic structure or site by a local ordinance adopted by the Historical Property Commission. Specifically identified property that is classified as historical shall be taxed on the basis of fifty percent (50%) of the true appraised value. After property has been designated as historical property, the owner must file a historical deferment application with the Tax Assessor's Office in order to be eligible to receive a property tax reduction

The deferred taxes will not become due unless or until 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.

If additional information is needed, please contact the Tax Assessor's Office in the county in which you live. These laws apply to all of North Carolina.

Builder's Inventory

The General Assembly enacted Session Law 2009-308 which provides a deferment of taxes levied on residences owned and constructed by builders that are unsold as of January 1 of each year. The deferment may be granted based on taxes levied on improvements only – the land is fully taxable.

• Taxes will be deferred only on a residence owned and constructed by a builder. The residence must be unoccupied and a certificate of occupancy must have been issued prior to January 1. A copy of the certificate of occupancy must be submitted with the application for deferment.
• The tax collector will notify the builder of the accumulated sum of deferred taxes and interest by showing said amounts on the annual tax bill. The maximum number of years taxes levied on improvements may be deferred is three years. All deferred taxes plus interest must be paid at the time of a disqualifying event.
• For more information, please see our news story.