GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2015

SESSION LAW 2015-223

HOUSE BILL 168

     AN ACT to exempt from property tax the increase in value of real property held for sale by a builder, to the extent the increase IS attributable to subdivision or improvements by the builder.

The General Assembly of North Carolina enacts:

SECTION 1.  G.S. 105‑273(3a) is reenacted and reads as rewritten:

"(3a)     "Builder" means a taxpayer licensed as a general contractor under G.S. 87‑1 and 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:

"§ 105‑277.02.  Certain real property held for sale classified for taxation at reduced valuation.

(a) Residential Real Property. – Residential real property held for sale by a builder is designated a special class of property under authority of Article V, Sec. 2(2) of the North Carolina Constitution. For purposes of this subsection, "residential real property" is real property that is intended to be sold and used as an individual's residence immediately or after construction of a residence, and the term excludes property that is either occupied by a tenant or used for commercial purposes such as residences shown to prospective buyers as models. Any increase in value of this classified property attributable to subdivision of, improvements other than buildings, or the construction of either a new single‑family residence or a duplex on the property by the builder is excluded from taxation under this Subchapter as long as the builder continues to hold the property for sale. In no event shall this exclusion extend for more than three years from the time the improved property was first subject to being listed for taxation by the builder.

(b) Commercial Property. – Commercial real property held for sale by a builder is designated a special class of property under authority of Article V, Sec. 2(2) of the North Carolina Constitution. For purposes of this subsection, "commercial real property" is real property that is intended to be sold and used for commercial purposes immediately or after improvement. Any increase in value of this classified property attributable to subdivision of or other improvements made to the property, by the builder, is excluded from taxation under this Subchapter as long as the builder continues to hold the property for sale. The exclusion authorized by this subsection ends at the earlier of the following:

(1) Five years from the time the improved property was first subject to being listed for taxation by the builder.

(2) Issuance of a building permit.

(3) Sale of the property.

(c) The builder must apply for any exclusion under this section annually as provided in G.S. 105‑282.1.

(d) In appraising property classified under this section, the assessor shall specify what portion of the value is an increase attributable to subdivision or other improvement by the builder."

SECTION 3.  This act is effective for taxes imposed for taxable years beginning on or after July 1, 2016, and applies to subdivision of or other improvements made on or after July 1, 2015.

In the General Assembly read three times and ratified this the 13^th day of August, 2015.

                                                                    s/  Philip E. Berger

                                                                         President Pro Tempore of the Senate

                                                                    s/  Tim Moore

                                                                         Speaker of the House of Representatives

                                                                    s/  Pat McCrory

                                                                         Governor

Approved 2:22 p.m. this 18^th day of August, 2015