Another article on the website explores the homestead exemption giving County property tax relief to homeowners with low income who are age 65 or older with limited income.
In this article, let’s look at two other programs that offer help.
Disabled Veteran Exemption: A NC statute excludes the first $45,000 of tax value of the permanent residence of a “disabled veteran.” Tax is figured on a lower tax value, resulting in a smaller tax bill. Because it is an exclusion rather than a deferral, the excluded taxes never have to be paid back. A “disabled veteran” is an honorably discharged veteran (or one discharged under honorable conditions) who has a total permanent service connected disability OR a veteran who receives benefits for specially adapted housing under 38 U.S. Code 2101.
The application requires certification of disability from the Department of Veterans Affairs. There are no age or income limits for this program. The exclusion is also available to the surviving spouse (who hasn’t remarried) of (1) a disabled veteran, or (2) a veteran who died as a result of a service-related condition who was honorably discharged (or discharged under honorable conditions), or (3) a service member who died from a service-related condition in the line of duty but not as a result of willful misconduct.
The application for a given year is due by June 1 of that year. Once you have been approved, you do not have to reapply each year, but you do have to notify the tax office if you no longer qualify. Many counties, including Orange, will accept late applications for eligible persons, but there is an extra step of approval by the Board of County Commissioners, which causes a delay in approval.
Circuit Breaker Deferment: A different statute allows your tax payment to be limited to a set percentage of your income, but it defers these taxes, meaning the part you did not have to pay becomes a lien against your property for three years. When you sell your property or die, you or your estate will have to pay the amount that was deferred for the past three years. Because it is a deferral rather than an exclusion, if you qualify for the homestead exclusion or the disabled veteran exclusion, those programs are better than the circuit breaker deferment.
The circuit breaker program limits your payment of property taxes on your permanent residence to 4% of your income if your income is $27,100 or less; if your income is between $27,100 and $40,650, the limit is 5% of your income. (That is based on 2012 income figures; they are indexed upward from time to time.) So, if your income is $25,000, the most you would pay is $1,000; the rest of your bill would be deferred. If your income is $37,000, the most you would pay is $1,850; the rest would be deferred. Remember that “income” means taxable and non-taxable income, including any non-taxable Social Security benefits.
Remember to submit your applications on time to avoid delays and to get the relief you are entitled to receive.
This article was last updated in January 2020.