If you have trouble affording the County property tax bill on your home, you may be eligible for relief on your taxes in the future. There are two programs for partial exclusion (which reduce your taxes by decreasing the value used for calculating taxes) and one program for a deferral.
This article looks at the Homestead Exemption for elderly and disabled persons with low income. Another article in this newsletter addresses the Disabled Veteran Exclusion and the Circuit Breaker Deferment Program.
The Homestead Exemption began when the legislature passed N.C.G.S. 105-277.1 in 1972. The Exemption excludes $25,000 in value, or 50% of the tax value of the residence, whichever is greater. This will significantly lower the homeowner’s tax bill. Orange County residents who qualify for a Homestead Exemption also qualify for assistance with the 3R Fee. You are eligible for the exemption on your permanent residence if (1) you or your spouse is over age 65 OR is totally and permanently disabled, AND (2) your income from the previous year is $27,100 or less (so for a 2012 application, this means your 2011 income). Ownership and disability is determined as of January 1 of each year, so if you buy the home during the year or become disabled mid-year, you will not qualify until the following year.
The home must be your “permanent home,” not a second home or vacant farmland. It is still your “permanent home” if you continue to own it while in a rehabilitation or nursing home.
What does “income” mean? It means all money received from EVERY source other than gifts or inheritances from a spouse, parent, grandparent, child, or grandchild. For example, income includes taxable and non-taxable Social Security benefits, taxable and non-taxable interest income, business income, rental income, and retirement income. Proof of income is required. If you are married, income from both spouses is counted, regardless whether the property is owned jointly.
Income limits are adjusted up yearly by the same percentage as the Social Security Administration uses for Social Security benefit increases. In years when SSA does not do a cost of living increase, the Homestead Exemption income limit does not increase either.
This is a tax forgiveness or exclusion program, meaning you do not ever owe the excluded taxes. You will not have to catch up the excluded taxes when you sell your property or when someone else inherits it from you. It is not merely a deferral of taxes owed.
You must turn in an application to the County Tax Office BY JUNE 1 of a given year if you want the exemption for that year. You can get application at the Tax Office or online at http://www.dornc.com/downloads/av9_2011.pdf. There is a separate application for relief on the 3R fee. Once you are approved for the Exemption, you do not need to reapply each year, but you must notify the Tax Office if income goes above the eligibility limit, or if you (or your spouse) is no longer totally and permanently disabled. Many counties, including Orange County, have a policy of accepting late applications, but they must be approved individually by the County Commissioners at a regular meeting, so this can delay approval.
As of 2012, since 2001 the State has not reimbursed counties or cities for tax revenue lost due to Homestead Exemptions. Prior to that time, the State reimbursed part of this lost tax revenue.
This article was last updated in January 2020.