New Property Tax Exclusion for Developers

<p>The start of the 2016-2017 fiscal year will bring with it a new property tax exclusion aimed at residential and commercial development.  Known informally as the “builders’ inventory” exclusion, the new law was passed as S.L. 2015-223 and will be codified as G.S. 105-277.02.</p> <p>In today’s blog, I offer a quick overview of the new exclusion and highlight some issues that developers need to keep in mind if they intend to benefit from it.</p> <p>For those who want more details, please see my previous Coates’ Canons’ Local Government Law Blog posts here and here or this Property Tax Bulletin.</p> <p>Sixty-Second Overview:</p> <p>The exclusion eliminates property taxes for several years on certain improvements on property owned and held for sale by builders.</p> <p>For residential property, the exclusion extends for a maximum of three years and excludes property taxes on the increase in property value attributable to:</p> subdivision of a parcel for future residential construction; non-structural improvements (grading, streets, utilities, etc.) for future residential construction; and, construction of a new single-family home or duplex. <p>For commercial property, the exclusion extends for a maximum of five years and excludes property taxes on the increase on property value attributable only to non-structural improvements (grading, streets, utilities).  Any improvement that requires the issuance of a building permit for a commercial structure terminates eligibility for the exclusion.</p> <p>The statute rather unhelpfully defines “commercial property” to mean any property that is “intended to be sold and used for commercial purposes immediately or after improvement.” I think this means that a site that is zoned for mixed use and therefore could be developed into [...]</p>