AGENDA #10.1
MEMORANDUM
TO: Mayor and Town Council
FROM: Ralph D. Karpinos, Town Attorney
SUBJECT: Request for Further Detail: Legislative Proposal
DATE: May 10, 2004
The attached resolution would establish a more specific position regarding the Council’s request for legislation in the upcoming session of the North Carolina General Assembly to increase the value of property that would be excluded from taxation under the homestead exemption in N.C.G.S. Sec. 105-277.1
BACKGROUND
Early each calendar year the Town Council goes through a process to develop a list of policy positions and requests to submit to the Town’s Legislative Delegation at the beginning of the annual session of the North Carolina General Assembly.
On April 14, the Town Council adopted a resolution establishing its list of legislative requests for the 2004 Session of the North Carolina General Assembly. On April 20, 2004, those requests were forwarded to our legislative delegation by a letter from the Mayor.
One of the requests forwarded was a request that the local delegation consider requesting a state-wide bill to increase the homestead exemption.
DISCUSSION
On May 4, 2004, we were asked by an attorney for the General Assembly’s Bill Drafting Division if the Town could provide more specific information regarding how much of an increase in the homestead exemption the Town was interested in proposing. We believe this is a policy matter for the Council to consider. Attached is a copy of North Carolina General Statute 105-277.1, the statute that sets the homestead exemption state-wide. As it is presently written, it includes provisions for automatic adjustment annually.
We are working to provide additional information for you on the impact of possible changes to the exemption for the Town to present at tonight’s meeting.
RECOMMENDATION
We recommend that the Council consider whether it wishes to provide a more specific indication of the type of change it wishes to see to this law. If so, the attached resolution may be completed and adopted. We would provide this information in response to the request from the Legislative staff.
ATTACHMENTS
1. Copy of N.C.G.S. Sec. 105-277.1 (p. 4).
A RESOLUTION ESTABLISHING A SPECIFIC POSITION REGARDING THE TOWN OF CHAPEL HILL’S REQUEST FOR AN INCREASE IN THE HOMESTEAD EXEMPTION (2004-05-10/R-17)
WHEREAS, the Council of the Town of Chapel Hill adopted a legislative program on April 14, 2004; and
WHEREAS, as part of that program, the Council requested a bill to increase the value of property that would be excluded from taxation by N.C.G.S. Sec. 105-277.1; and
WHEREAS, the Town has been requested to be more specific in the nature of its request for a modification of this statute;
NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council hereby requests that the homestead exemption from property taxes be increased to ____________.
This the 10th day of May, 2004.
§ 105-277.1. Property tax homestead exclusion
(a) Exclusion. - A permanent residence owned and occupied by a qualifying owner is designated a special class of property under Article V, Sec. 2(2) of the North Carolina Constitution and is taxable in accordance with this section. The amount of the appraised value of the residence equal to the exclusion amount is excluded from taxation. The exclusion amount is the greater of twenty thousand dollars ($20,000) or fifty percent (50%) of the appraised value of the residence. A qualifying owner is an owner who meets all of the following requirements as of January 1 preceding the taxable year for which the benefit is claimed:
(1) Is at least 65 years of age or totally and permanently disabled.
(2) Has an income for the preceding calendar year of not more than the income eligibility limit.
(3) Is a North Carolina resident.
(a1) Temporary Absence. - An otherwise qualifying owner does not lose the benefit of this exclusion because of a temporary absence from his or her permanent residence for reasons of health, or because of an extended absence while confined to a rest home or nursing home, so long as the residence is unoccupied or occupied by the owner's spouse or other dependent.
(a2) Income Eligibility Limit. -Until July 1, 2003, the income eligibility limit is eighteen thousand dollars ($18,000). For taxable years beginning on or after July 1, 2003, the income eligibility limit is the amount for the preceding year, adjusted by the same percentage of this amount as the percentage of any cost-of-living adjustment made to the benefits under Titles II and XVI of the Social Security Act for the preceding calendar year, rounded to the nearest one hundred dollars ($100.00). On or before July 1 of each year, the Department of Revenue must determine the income eligibility amount to be in effect for the taxable year beginning the following July 1 and must notify the assessor of each county of the amount to be in effect for that taxable year.
(b) Definitions. - The following definitions apply in this section:
(1) Code. -The Internal Revenue Code, as defined in G.S. 105-228.90.
(1a) Income. -Adjusted gross income, as defined in section 62 of the Code, plus all other moneys received from every source other than gifts or inheritances received from a spouse, lineal ancestor, or lineal descendant. For married applicants residing with their spouses, the income of both spouses must be included, whether or not the property is in both names.
(1b) Owner. -A person who holds legal or equitable title, whether individually, as a tenant by the entirety, a joint tenant, or a tenant in common, or as the holder of a life estate or an estate for the life of another. A manufactured home jointly owned by husband and wife is considered property held by the entirety.
(2) Repealed by Session Laws 1993, c. 360, s. 1.
(2a) Repealed by Session Laws 1985 (Reg. Sess., 1986), c. 982, s. 20.
(3) Permanent residence. -A person's legal residence. It includes the dwelling, the dwelling site, not to exceed one acre, and related improvements. The dwelling may be a single family residence, a unit in a multi-family residential complex, or a manufactured home.
(4) Totally and permanently disabled. -A person is totally and permanently disabled if the person has a physical or mental impairment that substantially precludes him or her from obtaining gainful employment and appears reasonably certain to continue without substantial improvement throughout his or her life.
(c) Application. -An application for the exclusion 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 exclusion is claimed. When property is owned by two or more persons other than husband and wife and one or more of them qualifies for this exclusion, each owner must apply separately for his or her proportionate share of the exclusion.
(1) Elderly Applicants. -Persons 65 years of age or older may apply for this exclusion by entering the appropriate information on a form made available by the assessor under G.S. 105-282.1.
(2) Disabled Applicants. -Persons who are totally and permanently disabled may apply for this exclusion by (i) entering the appropriate information on a form made available by the assessor under G.S. 105-282.1 and (ii) furnishing acceptable proof of their disability. The proof must be in the form of a certificate from a physician licensed to practice medicine in North Carolina or from a governmental agency authorized to determine qualification for disability benefits. After a disabled applicant has qualified for this classification, the applicant is not required to furnish an additional certificate unless the applicant's disability is reduced to the extent that the applicant could no longer be certified for the taxation at reduced valuation.
(d) Multiple Ownership. -A permanent residence owned and occupied by husband and wife as tenants by the entirety is entitled to the full benefit of this exclusion notwithstanding that only one of them meets the age or disability requirements of this section. When a permanent residence is owned and occupied by two or more persons other than husband and wife and one or more of the owners qualifies for this exclusion, each qualifying owner is entitled to the full amount of the exclusion not to exceed his or her proportionate share of the valuation of the property. No part of an exclusion available to one co- owner may be claimed by any other co-owner and in no event may the total exclusion allowed for a permanent residence exceed the exclusion amount provided in this section.
Added by Laws 1971, c. 932, § 1. Amended by Laws 1973, c. 448, § 1; Laws 1975, c. 881, § 2; Laws 1977, c. 666, § 1; Laws 1979, c. 356, § 1; Laws 1979, c. 846, § 1; Laws 1981, c. 54, § 1; Laws 1981, c. 1052, § 1; Laws 1985, c. 656, §§ 44, 45; Laws 1985, c. 656, §§ 48, 49; Laws 1985 (Reg. Sess., 1986), c. 982, §§ 19, 20; Laws 1987, c. 45, § 1; Laws 1993, c. 360, § 1; Laws 1996 (2nd Ex. Sess.), c. 18, § 15.1(a); S.L. 2001-308, § 1, eff. July 1, 2002.