North Carolina General Statutes |
[Editor's Note: The following are only selected sections of Article 12. The Article in its entirety is contained in the official print version of the North Carolina General Statutes.]
§ 105-277.2. Agricultural, horticultural, and forestland -
Definitions.
The following definitions apply in G.S. 105-277.3 through
G.S. 105-277.7:
(1) Agricultural land. - Land that is a part of a farm
unit that is actively engaged in the commercial
production or growing of crops, plants, or animals
under a sound management program. Agricultural land
includes woodland and wasteland that is a part of
the farm unit, but the woodland and wasteland
included in the unit shall be appraised under the
use-value schedules as woodland or wasteland. A
farm unit may consist of more than one tract of
agricultural land, but at least one of the tracts
must meet the requirements in G.S. 105-277.3(a)(1),
and each tract must be under a sound management
program.
(1a) Business entity. - A corporation, a general
partnership, a limited partnership, or a limited
liability company.
(2) Forestland. - Land that is a 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 a part of the
forest unit, but the wasteland included in the unit
shall be appraised under the use-value schedules as
wasteland. A forest unit may consist of more than
one tract of forestland, but at least one of the
tracts must meet the requirements in G.S.
105-277.3(a)(3), and each tract must be under a
sound management program.
(3) Horticultural land. - 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 woodland and
wasteland included in the unit shall be appraised
under the use-value schedules as woodland or
wasteland. A horticultural unit may consist of more
than one tract of horticultural land, but at least
one of the tracts must meet the requirements in
G.S. 105-277.3(a)(2), and each tract must be under
a sound management program.
(4) Individually owned. - Owned by one of the
following:
a. A natural person. For the purpose of this
section, a natural person who is an income
beneficiary of a trust that owns land may
elect to treat the person's beneficial share
of the land as owned by that person. If the
person's beneficial interest is not an
identifiable share of land but can be
established as a proportional interest in the
trust income, the person's beneficial share of
land is a percentage of the land owned by the
trust that corresponds to the beneficiary's
proportional interest in the trust income. For
the purpose of this section, a natural person
who is a member of a business entity, other
than a corporation, that owns land may elect
to treat the person's share of the land as
owned by that person. The person's share is a
percentage of the land owned by the business
entity that corresponds to the person's
percentage of ownership in the entity.
b. A business entity having as its principal
business one of the activities described in
subdivisions (1), (2), and (3) and whose
members are all natural persons who meet one
or more of the following conditions:
1. The member is actively engaged in the
business of the entity.
2. The member is a relative of a member who
is actively engaged in the business of
the entity.
3. The member is a relative of, and
inherited the membership interest from, a
decedent who met one or both of the
preceding conditions after the land
qualified for classification in the hands
of the business entity.
c. A trust that was created by a natural person
who transferred the land to the trust and each
of whose beneficiaries who is currently
entitled to receive income or principal meets
one of the following conditions:
1. Is the creator of the trust or the
creator's relative.
2. Is a second trust whose beneficiaries who
are currently entitled to receive income
or principal are all either the creator
of the first trust or the creator's
relatives.
d. A testamentary trust that meets all of the
following conditions:
1. It was created by a natural person who
transferred to the trust land that
qualified in that person's hands for
classification under G.S. 105-277.3.
2. At the time of the creator's death, the
creator had no relatives as defined in
this section as of the date of death.
3. The trust income, less reasonable
administrative expenses, is used
exclusively for educational, scientific,
literary, cultural, charitable, or
religious purposes as defined in G.S.
105-278.3(d).
(4a) Member. - A shareholder of a corporation, a partner
of a general or limited partnership, or a member of
a limited liability company.
(5) Present-use value. - The value of land in its
current use as agricultural land, horticultural
land, or forestland, based solely on its ability to
produce income, using a rate of nine percent (9%)
to capitalize the expected net income of the
property and assuming an average level of
management.
(5a) Relative. - Any of the following:
a. A spouse or the spouse's lineal ancestor or
descendant.
b. A lineal ancestor or a lineal descendant.
c. A brother or sister, or the lineal descendant
of a brother or sister. For the purposes of
this sub-subdivision, the term brother or
sister includes stepbrother or stepsister.
d. An aunt or an uncle.
e. A spouse of a person listed in paragraphs a.
through d.
For the purpose of this subdivision, an
adoptive or adopted relative is a relative and the
term "spouse" includes a surviving spouse.
(6) Sound management program. - A program of production
designed to obtain the greatest net return from the
land consistent with its conservation and long-term
improvement. (1973, c. 709, s. 1; 1975, c. 746, s.
1; 1985, c. 628, s. 1; c. 667, ss. 1, 4; 1987, c.
698, s. 1; 1995, c. 454, s. 1; 1995 (Reg. Sess.,
1996), c. 646, s. 17; 1998-98, s. 24.)
§ 105-277.3. Agricultural, horticultural, and forestland -
Classifications.
(a)Classes Defined. - The following classes of property
are designated special classes of property under authority of
Section 2(2) of Article V of the North Carolina Constitution and
shall be appraised, assessed, and taxed as provided in G.S.
105-277.2 through G.S. 105-277.7.
(1) Agricultural land. - Individually owned
agricultural land consisting of one or more tracts,
one of which consists of at least 10 acres that are
in actual production and that, for the three years
preceding January 1 of the year for which the
benefit of this section is claimed, have produced
an average gross income of at least one thousand
dollars ($1,000). 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. Land in actual production includes land
under improvements used in the commercial
production or growing of crops, plants, or animals.
(2) Horticultural land. - Individually owned
horticultural land consisting of one or more
tracts, one of which consists of at least five
acres that are in actual production and that, for
the three years preceding January 1 of the year for
which the benefit of this section is claimed, have
met the applicable minimum gross income
requirement. Land in actual production includes
land under improvements used in the commercial
production or growing of fruits or vegetables or
nursery or floral products. Land that has been used
to produce evergreens intended for use as Christmas
trees must have met the minimum gross income
requirements established by the Department of
Revenue for the land. All other horticultural land
must have produced an average gross income of at
least one thousand dollars ($1,000). 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.
(3) Forestland. - Individually owned forestland
consisting of one or more tracts, one of which
consists of at least 20 acres that are in actual
production and are not included in a farm unit.
(b) Natural Person Ownership Requirements. - In order to come
within a classification described in subsection (a) of this
section, the land must, if owned by a natural person, also
satisfy one of the following conditions:
(1) It is the owner's place of residence.
(2) It has been owned by the current owner or a
relative of the current owner for the four years
preceding January 1 of the year for which the
benefit of this section is claimed.
(3) At the time of transfer to the current owner, it
qualified for classification in the hands of a
business entity or trust that transferred the land
to the current owner who was a member of the
business entity or a beneficiary of the trust, as
appropriate.
(b1)Entity Ownership Requirements. - In order to come within
a classification described in subsection (a) of this section,
the land must, if owned by a business entity or trust, have been
owned by the business entity or trust or by one or more of its
members or creators, respectively, for the four years
immediately preceding January 1 of the year for which the
benefit of this section is claimed.
(b2)Exception to Ownership Requirements. - G.S. 105-277.4(c)
provides that deferred taxes are payable if land fails to meet
any condition or requirement for classification. Accordingly, if
land fails to meet an ownership requirement due to a change of
ownership, G.S. 105-277.4(c) applies. Despite this failure and
the resulting liability for taxes under G.S. 105-277.4(c), the
land may qualify for classification in the hands of the new
owner if both of the conditions listed in this subsection are
met, even if the new owner does not meet all of the ownership
requirements of subsections (b) and (b1) of this section with
respect to the land. If the land qualifies for classification in
the hands of the new owner under the provisions of this
subsection, then the new owner becomes liable for the deferred
taxes, and the deferred taxes become payable if the land fails
to meet any other condition or requirement for classification.
(1) The land was appraised at its present use value or
was eligible for appraisal at its present use value
at the time title to the land passed to the new
owner.
(2) At the time title to the land passed to the new
owner, the new owner acquires the land for the
purposes of and continues to use the land for the
purposes it was classified under subsection (a) of
this section while under previous ownership.
(c) Repealed by Session Laws 1995, c. 454, s. 2.
(d) Exception for Conservation Reserve Program. - Land
enrolled in the federal Conservation Reserve Program authorized
by 16 U.S.C. § 1381 is considered to be in actual production,
and income derived from participation in the federal
Conservation Reserve Program may be used in meeting the minimum
gross income requirements of this section either separately or
in combination with income from actual production. Land enrolled
in the federal Conservation Reserve Program shall be assessed as
agricultural land if it is planted in vegetation other than
trees, or as forestland if it is planted in trees.
(e) Exception for Turkey Disease. - Agricultural land that
meets all of the following conditions is considered to be in
actual production and to meet the minimum gross income
requirements:
(1) The land was in actual production in turkey growing
within the preceding two years and qualified for
present use value treatment while it was in actual
production.
(2) The land was taken out of actual production in
turkey growing solely for health and safety
considerations due to the presence of Poult
Enteritis Mortality Syndrome among turkeys in the
same county or a neighboring county.
(3) The land is otherwise eligible for present use
value treatment. (1973, c. 709, s. 1; 1975, c. 746,
s. 2; 1983, c. 821; c. 826; 1985, c. 667, ss. 2, 3,
6.1; 1987, c. 698, ss. 2-5; 1987 (Reg. Sess.,
1988), c. 1044, s. 13.1; 1989, cc. 99, 736, s. 1;
1989 (Reg. Sess., 1990), c. 814, s. 29; 1995, c.
454, s. 2; 1997-272, s. 1; 1998-98, s. 22;
2001-499, s. 1.)
§ 105-277.4. Agricultural, horticultural and forestland -
Application; appraisal at use value; appeal; deferred
taxes.
(a)Application. - Property coming within one of the
classes defined in G.S. 105-277.3 shall be eligible for taxation
on the basis of the value of the property in its present use if
a timely and proper application is filed with the assessor of
the county in which the property is located. The application
shall clearly show that the property comes within one of the
classes and shall also contain any other relevant information
required by the assessor to properly appraise the property at
its present-use value. An initial application shall be filed
during the regular listing period of the year for which the
benefit of this classification is first claimed, or within 30
days of the date shown on a notice of a change in valuation made
pursuant to G.S. 105-286 or G.S. 105-287. A new application is
not required to be submitted unless the property is transferred
or becomes ineligible for use-value appraisal because of a
change in use or acreage.
(b) Appraisal at Present-use Value. - Upon receipt of a
properly executed application, the assessor shall appraise the
property at its present-use value as established in the schedule
prepared pursuant to G.S. 105-317. In appraising the property at
its present-use value, the assessor shall appraise the
improvements located on qualifying land according to the
schedules and standards used in appraising other similar
improvements in the county. If all or any part of a qualifying
tract of land is located within the limits of an incorporated
city or town, or is property annexed subject to G.S. 160A-37(f1)
or G.S. 160A-49(f1), the assessor shall furnish a copy of the
property record showing both the present-use appraisal and the
valuation upon which the property would have been taxed in the
absence of this classification to the collector of the city or
town. He shall also notify the tax collector of any changes in
the appraisals or in the eligibility of the property for the
benefit of this classification. Upon a request for a
certification pursuant to G.S. 160A-37(f1) or G.S.160A-49(f1),
or any change in the certification, the assessor for the county
where the land subject to the annexation is located shall,
within 30 days, determine if the land meets the requirements of
G.S. 160A-37(f1)(2) or G.S. 160A-49(f1)(2) and report the
results of its findings to the city.
(b1)Appeal. - Decisions of the assessor regarding the
qualification or appraisal of property under this section may be
appealed to the county board of equalization and review or, if
that board is not in session, to the board of county
commissioners. Decisions of the county board may be appealed to
the Property Tax Commission.
(c) Deferred Taxes. - Land meeting the conditions for
classification under G.S. 105-277.3 shall be taxed on the basis
of the value of the land for its present use. The difference
between the taxes due on the present-use basis and the taxes
that would have been payable in the absence of this
classification, together with any interest, penalties, or costs
that may accrue thereon, are a lien on the real property of the
taxpayer as provided in G.S. 105-355(a). The difference in taxes
shall be carried forward in the records of the taxing unit or
units as deferred taxes. The taxes become due and payable when
the land fails to meet any condition or requirement for
classification. The tax for the fiscal year that opens in the
calendar year in which deferred taxes become due is computed as
if the land had not been classified for that year, and taxes for
the preceding three fiscal years that have been deferred are
immediately payable, together with interest as provided in G.S.
105-360 for unpaid taxes. Interest accrues on the deferred taxes
due as if they had been payable on the dates on which they
originally became due. If only a part of the qualifying tract of
land fails to meet a condition or requirement for
classification, a determination shall be made of the amount of
deferred taxes applicable to that part and that amount becomes
payable with interest as provided above. Upon the payment of any
taxes deferred in accordance with this section for the three
years immediately preceding a disqualification, all liens
arising under this subsection are extinguished. The deferred
taxes for any given year may be paid in that year without the
qualifying tract of land becoming ineligible for deferred
status.
(d) Exceptions. - Notwithstanding the provisions of
subsection (c) of this section, if property loses its
eligibility for present use value classification solely due to
one of the following reasons, no deferred taxes are due and the
lien for the deferred taxes is extinguished:
(1) There is a change in income caused by enrollment of
the property in the federal conservation reserve
program established under 16 U.S.C. Chapter 58.
(2) The property is conveyed by gift to a nonprofit
organization and qualifies for exclusion from the
tax base pursuant to G.S. 105-275(12) or G.S.
105-275(29).
(3) The property is conveyed by gift to the State, a
political subdivision of the State, or the United
States.
(e) Repealed by Session Laws 1997-270, s. 3. (1973, c. 709,
s. 1; c. 905; c. 906, ss. 1, 2; 1975, c. 62; c. 746, ss. 3-7;
1981, c. 835; 1985, c. 518, s. 1; c. 667, ss. 5, 6; 1987, c. 45,
s. 1; c. 295, s. 5; c. 698, s. 6; 1987 (Reg. Sess., 1988), c.
1044, s. 13.2; 1995, c. 443, s. 4; c. 454, s. 3; 1997-270, s. 3;
1998-98, s. 23; 1998-150, s. 1; 2001-499, s. 2.)
§ 105-277.5. Agricultural, horticultural and forestland -
Notice of change in use.
Not later than the close of the listing period following
a change which would disqualify all or a part of a tract of land
receiving the benefit of this classification, the property owner
shall furnish the assessor with complete information regarding
such change. Any property owner who fails to notify the assessor
of changes as aforesaid regarding land receiving the benefit of
this classification shall be subject to a penalty of ten percent
(10%) of the total amount of the deferred taxes and interest
thereon for each listing period for which the failure to report
continues. (1973, c. 709, s. 1; 1975, c. 746, s. 8; 1987, c. 45,
s. 1.)
§ 105-277.6. Agricultural, horticultural and forestland -
Appraisal; computation of deferred tax.
(a)In determining the amount of the deferred taxes herein
provided, the assessor shall use the appraised valuation
established in the county's last general revaluation except for
any changes made under the provisions of G.S. 105-287.
(b) In revaluation years, as provided in G.S. 105-286, all
property entitled to classification under G.S. 105-277.3 shall
be reappraised at its true value in money and at its present use
value as of the effective date of the revaluation. The two
valuations shall continue in effect and shall provide the basis
for deferred taxes until a change in one or both of the
appraisals is required by law. The present use-value schedule,
standards, and rules shall be used by the tax assessor to
appraise property receiving the benefit of this classification
until the next general revaluation of real property in the
county as required by G.S. 105-286.
(c) Repealed by Session Laws 1987, c. 295, s. 2. (1973, c.
709, s. 1; 1975, c. 746, ss. 9, 10; 1987, c. 45, s. 1, c. 295,
s. 2.)
§ 105-277.7. Use-Value Advisory Board.
The Use-Value Advisory Board is established under the
supervision of the Agricultural Extension Service of North
Carolina State University. The Board shall annually submit to
the Department of Revenue a recommended use-value manual
developed in accordance with the guidelines in G.S.
105-289(a)(5). In developing the manual, the Board may consult
with federal and State agencies as needed. The Board shall
submit to the Department of Revenue recommendations concerning
requirements for horticultural land used to produce evergreens
intended for use as Christmas trees when requested to do so by
the Department.
The Board shall be chaired by the Director of the
Agricultural Extension Service of North Carolina State
University and shall consist of the following additional
members: a representative of the Department of Agriculture and
Consumer Services, designated by the Commissioner of
Agriculture; a representative of the Forest Resources Division
of the Department of Environment and Natural Resources,
designated by the Director of that Division; and a
representative of the Agricultural Extension Service at North
Carolina Agricultural and Technical State University, designated
by the Director of the Extension Service. All members shall
serve ex officio. The Agricultural Extension Service at North
Carolina State University shall provide clerical assistance to
the Board. (1973, c. 709, s. 1; 1975, c. 746, s. 11; 1985, c.
628, s. 2; 1989, c. 727, s. 218(44); c. 736, s. 2; 1997-261, s.
109; 1997-443, s. 11A.119(a).)