1. New Real Property Exclusion
Chris McLaughlin
Associate Professor, UNC SOG
Fall 2015

2. Over the past three years, which of these “Big Four” ACC football teams has won the most games?
Duke
UNC
NC State
Wake Forest

3. Who says we’re a basketball school?

4. S.L H168 G.S
New exclusion for improvements to real property that is held for sale

5. G.S. 105-277.02 Real property held for sale
Commercial or Residential
Excludes property taxes on increases in value due to:
Subdivision
Non-structural improvements (grading, streets)
New home construction

6. Residential Property

12. x

13. x

14. Commercial Property

19. Residential Property: What is Excluded?
The taxes on the increase in value of property held for sale attributed to:
Subdivision
Non-structural improvements
Construction of 1- or 2-family houses

20. Residential Property: How Long is the Exclusion?
3 years from the date the improved property was first listed

21. Residential Property: How Long is the Exclusion?
Parcel A subdivided and graded in July 2016
Improved parcel first listed 2017
Tax appraisal of improved Parcel A increases for year
Exclusion may cover 2017, 2018, and 2019

22. Residential Property: What Terminates the Exclusion?
Sale
Removal from the market
Lease to a tenant
Use for commercial purpose (model home)

23. Residential Property: No Effect on Exclusion
Builder occupies house
Third-party occupies house for free?

24. Commercial Property: What is Excluded?
The taxes on the increase in value of property held for sale attributed to:
Subdivision
Non-structural improvements

25. Commercial Property: How Long is the Exclusion?
5 years from the date the improved property was first listed

26. Commercial Property: What Terminates the Exclusion?
Issuance of building permit
Sale
Removal from market

27. Differences Between Residential and Commercial Exclusion
Structural improvements only for residential
3 years for residential
5 years for commercial

28. Similarities Between Residential and Commercial Exclusion
Builder: “a taxpayer engaged in the business of buying real property, making improvements to it, and then reselling it.”
Annual application (GS )

29. Similarities Between Residential and Commercial Exclusion
Applies to improvements made on after July 1, 2015
2016 first tax year available