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2. Property Taxation and Assessment
Chapter 3
Property Taxation and Assessment
Learning Objectives
Describe real property taxation and special assessment systems in North Carolina
Describe the Mill Rate System in the majority of other states
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3. Property Taxation and Assessment
Chapter 3
Property Taxation and Assessment
In This Chapter
Taxation on real property is the major source of revenue for local governments, including both the county and the city or township.
Taxes are imposed on real property ad valorem, or according to the value.
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4. Property Taxation and Assessment
Chapter 3
Property Taxation and Assessment
In This Chapter
North Carolina’s Machinery Act:
sets forth details of property taxation
requires that the assessed value of properties be set at 100% of the market value at least once every eight (8) years.
Adjustments upward or downward may be made at each four (4) year interval between assessments.
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5. Property Taxation and Assessment
Chapter 3
Property Taxation and Assessment
In This Chapter
A tax assessor is responsible for the valuation of property for tax purposes.
An owner may appeal the value given to his/her property when they believe their property has been overvalued.
If clients need an appraisal to establish the value of their property, agents should refer them to a licensed appraiser.
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6. Property Taxation and Assessment
Chapter 3
Property Taxation and Assessment
Tax Rate and Calculations
Local government sets a tax rate annually.
Tax rates may change yearly.
Tax rate is calculated by dividing total assessed value of property in the county or municipality subject to taxation by the amount of money needed for the budget.
A property may be subject to taxation from more than one governmental unit (i.e. county tax rate and city tax rate).
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7. Property Taxation and Assessment
Chapter 3
Property Taxation and Assessment
Tax Rate and Calculations
In North Carolina tax rates are stated as an amount per $100 of assessed value.
Nationally, most states use a mill rate method, which is a tax rate based upon 1/10 of 1 cent (i.e. .1 x .01 = .001 one mill)
Mill rate is typically stated as “x” number of mills
(i.e. 15 mills)
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8. Property Taxation and Assessment
Chapter 3
Property Taxation and Assessment
Property Subject to Taxation
All real and personal property is subject to taxation unless exempted in North Carolina.
Exceptions include:
property owned by governmental units
churches
other non-profit organizations
household goods
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9. Property Taxation and Assessment
Chapter 3
Property Taxation and Assessment
Property Subject to Taxation
Special Cases regarding taxes exist for:
historic properties
some agricultural properties
elderly and disabled people
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10. Property Taxation and Assessment
Chapter 3
Property Taxation and Assessment
Property Subject to Taxation
Licensed personal property (i.e. automobiles, boats, airplanes, etc.) are now taxed upon relicensing.
North Carolina legislature has eliminated the intangibles tax on funds in the bank.
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11. Property Taxation and Assessment
Chapter 3
Property Taxation and Assessment
Listing of Property for Taxation
All property subject to taxation must be listed with the local tax office.
Real property subject to taxation must be listed in the county where the it is located.
Personal property is listed in the county of the owner’s permanent residence.
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12. Property Taxation and Assessment
Chapter 3
Property Taxation and Assessment
Appraisal and Assessment
Appraisal is the process of determining the actual market value.
Assessment is the determination of value for purposes of taxation.
In North Carolina, real property must be re-valued at least every 8 years. At that time, the assessed value is set at 100% of the market value.
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13. Property Taxation and Assessment
Chapter 3
Property Taxation and Assessment
Timetable for Listing and Collection
Listing of property for taxation should be complete by January 31.
Taxes are due September 1 and are paid in arrears.
Taxes are delinquent if not paid by the following January 5th and are assessed penalties.
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14. Property Taxation and Assessment
Chapter 3
Property Taxation and Assessment
Special Priority of Property Tax Lien
Unpaid property taxes lawfully constitute a lien against the property as of January 1 of the current tax year (although tax bills are not due and payable until September 1.)
Property tax liens take special priority over all other liens. As such, it is an exception to North Carolina’s pure race system.
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15. Property Taxation and Assessment
Chapter 3
Property Taxation and Assessment
Special Assessment Liens
Special assessments are the pro-rata share of the cost of some improvement.
These are taxes that are levied for special county, city, or town projects. ex- paving streets, new sewer lines.
Statutes allow several ways to determine the amount of these assessments.
Often the assessments are based on the number of front feet a property has that borders on the improvement.
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16. Property Taxation and Assessment
Chapter 3
Property Taxation and Assessment
Special Assessment Liens
Special assessment liens take priority after real and personal property tax liens.
Counties have the authority to establish special assessments for new utilities to the area.
Cities and towns have a similar authority to establish special assessments.
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