105‑277.2.  Agricultural, horticultural, and forestland Definitions.

The following definitions apply in G.S. 105‑277.3 through G.S. 105‑277.7:

(1)        Agricultural land. Land that is a part of a farm unit that is actively engaged in the commercial production or growing of crops, plants, or animals under a sound management program. Agricultural land includes woodland and wasteland that is a part of the farm unit, but the woodland and wasteland included in the unit must be appraised under the use‑value schedules as woodland or wasteland. A farm unit may consist of more than one tract of agricultural land, but at least one of the tracts must meet the requirements in G.S. 105‑277.3(a)(1), and each tract must be under a sound management program. If the agricultural land includes less than 20 acres of woodland, then the woodland portion is not required to be under a sound management program. Also, woodland is not required to be under a sound management program if it is determined that the highest and best use of the woodland is to diminish wind erosion of adjacent agricultural land, protect water quality of adjacent agricultural land, or serve as buffers for adjacent livestock or poultry operations.

(1a)      Business entity. A corporation, a general partnership, a limited partnership, or a limited liability company.

(2)        Forestland. Land that is a part of a forest unit that is actively engaged in the commercial growing of trees under a sound management program. Forestland includes wasteland that is a part of the forest unit, but the wasteland included in the unit must be appraised under the use‑value schedules as wasteland. A forest unit may consist of more than one tract of forestland, but at least one of the tracts must meet the requirements in G.S. 105‑277.3(a)(3), and each tract must be under a sound management program.

(3)        Horticultural land. Land that is a part of a horticultural unit that is actively engaged in the commercial production or growing of fruits or vegetables or nursery or floral products under a sound management program. Horticultural land includes woodland and wasteland that is a part of the horticultural unit, but the woodland and wasteland included in the unit must be appraised under the use‑value schedules as woodland or wasteland. A horticultural unit may consist of more than one tract of horticultural land, but at least one of the tracts must meet the requirements in G.S. 105‑277.3(a)(2), and each tract must be under a sound management program. If the horticultural land includes less than 20 acres of woodland, then the woodland portion is not required to be under a sound management program. Also, woodland is not required to be under a sound management program if it is determined that the highest and best use of the woodland is to diminish wind erosion of adjacent horticultural land or protect water quality of adjacent horticultural land. Land used to grow horticultural and agricultural crops on a rotating basis or where the horticultural crop is set out or planted and harvested within one growing season, may be treated as agricultural land as described in subdivision (1) of this section when there is determined to be no significant difference in the cash rental rates for the land.

(4)        (Effective for taxes imposed for taxable years beginning before July 1, 2008) Individually owned. Owned by one of the following:

a.         A natural person. For the purpose of this section, a natural person who is an income beneficiary of a trust that owns land may elect to treat the person's beneficial share of the land as owned by that person. If the person's beneficial interest is not an identifiable share of land but can be established as a proportional interest in the trust income, the person's beneficial share of land is a percentage of the land owned by the trust that corresponds to the beneficiary's proportional interest in the trust income. For the purpose of this section, a natural person who is a member of a business entity, other than a corporation, that owns land may elect to treat the person's share of the land as owned by that person. The person's share is a percentage of the land owned by the business entity that corresponds to the person's percentage of ownership in the entity.

b.         A business entity having as its principal business one of the activities described in subdivisions (1), (2), and (3) and whose members are all natural persons who meet one or more of the conditions listed in this sub‑subdivision. For the purpose of this sub‑subdivision, the terms "having as its principal business" and "actively engaged in the business of the entity" include the leasing of the land for one of the activities described in subdivisions (1), (2), and (3) only if all members of the business entity are relatives.

1.         The member is actively engaged in the business of the entity.

2.         The member is a relative of a member who is actively engaged in the business of the entity.

3.         The member is a relative of, and inherited the membership interest from, a decedent who met one or both of the preceding conditions after the land qualified for classification in the hands of the business entity.

c.         A trust that was created by a natural person who transferred the land to the trust and each of whose beneficiaries who is currently entitled to receive income or principal meets one of the following conditions:

1.         Is the creator of the trust or the creator's relative.

2.         Is a second trust whose beneficiaries who are currently entitled to receive income or principal are all either the creator of the first trust or the creator's relatives.

d.         A testamentary trust that meets all of the following conditions:

1.         It was created by a natural person who transferred to the trust land that qualified in that person's hands for classification under G.S. 105‑277.3.

2.         At the time of the creator's death, the creator had no relatives as defined in this section as of the date of death.

3.         The trust income, less reasonable administrative expenses, is used exclusively for educational, scientific, literary, cultural, charitable, or religious purposes as defined in G.S. 105‑278.3(d).

e.         Tenants in common, if each tenant is either a natural person or a business entity described in sub‑subdivision b. of this subdivision. Tenants in common may elect to treat their individual shares as owned by them individually in accordance with G.S. 105‑302(c)(9). The ownership requirements of G.S. 105‑277.3(b) apply to each tenant in common who is a natural person, and the ownership requirements of G.S. 105‑277.3(b1) apply to each tenant in common who is a business entity.

(4)        (Effective for taxes imposed for taxable years beginning on or after July 1, 2008) Individually owned. Owned by one of the following:

a.         An individual.

b.         A business entity that meets all of the following conditions:

1.         Its principal business is farming agricultural land, horticultural land, or forestland.

2.         All of its members are, directly or indirectly, individuals who are actively engaged in farming agricultural land, horticultural land, or forestland or a relative of one of the individuals who is actively engaged. An individual is indirectly a member of a business entity that owns the land if the individual is a member of a business entity or a beneficiary of a trust that is part of the ownership structure of the business entity that owns the land.

3.         It is not a corporation whose shares are publicly traded, and none of its members are corporations whose shares are publicly traded.

4.         If it leases the land, all of its members are individuals and are relatives. Under this condition, "principal business" and "actively engaged" include leasing.

c.         A trust that meets all of the following conditions:

1.         It was created by an individual who owned the land and transferred the land to the trust.

2.         All of its beneficiaries are, directly or indirectly, individuals who are the creator of the trust or a relative of the creator. An individual is indirectly a beneficiary of a trust that owns the land if the individual is a beneficiary of another trust or a member of a business entity that has a beneficial interest in the trust that owns the land.

d.         A testamentary trust that meets all of the following conditions:

1.         It was created by an individual who transferred to the trust land that qualified in that individual's hands for classification under G.S. 105‑277.3.

2.         At the date of the creator's death, the creator had no relatives.

3.         The trust income, less reasonable administrative expenses, is used exclusively for educational, scientific, literary, cultural, charitable, or religious purposes as defined in G.S. 105‑278.3(d).

e.         Tenants in common, if each tenant would qualify as an owner if the tenant were the sole owner. Tenants in common may elect to treat their individual shares as owned by them individually in accordance with G.S. 105‑302(c)(9). The ownership requirements of G.S. 105‑277.3(b) apply to each tenant in common who is an individual, and the ownership requirements of G.S. 105‑277.3(b1) apply to each tenant in common who is a business entity or a trust.

(4a)      Member. A shareholder of a corporation, a partner of a general or limited partnership, or a member of a limited liability company.

(5)        Present‑use value. The value of land in its current use as agricultural land, horticultural land, or forestland, based solely on its ability to produce income and assuming an average level of management. A rate of nine percent (9%) shall be used to capitalize the expected net income of forestland. The capitalization rate for agricultural land and horticultural land is to be determined by the Use‑Value Advisory Board as provided in G.S. 105‑277.7.

(5a)      (Effective for taxes imposed for taxable years beginning before July 1, 2008) Relative. Any of the following:

a.         A spouse or the spouse's lineal ancestor or descendant.

b.         A lineal ancestor or a lineal descendant.

c.         A brother or sister, or the lineal descendant of a brother or sister. For the purposes of this sub‑subdivision, the term brother or sister includes stepbrother or stepsister.

d.         An aunt or an uncle.

e.         A spouse of a person listed in paragraphs a. through d. For the purpose of this subdivision, an adoptive or adopted relative is a relative and the term "spouse" includes a surviving spouse.

(5a)      (Effective for taxes imposed for taxable years beginning on or after July 1, 2008) Relative. Any of the following:

a.         A spouse or the spouse's lineal ancestor or descendant.

b.         A lineal ancestor or a lineal descendant.

c.         A brother or sister, or the lineal descendant of a brother or sister. For the purposes of this sub‑subdivision, the term brother or sister includes stepbrother or stepsister.

d.         An aunt or an uncle.

e.         A spouse of an individual listed in paragraphs a. through d. For the purpose of this subdivision, an adoptive or adopted relative is a relative and the term "spouse" includes a surviving spouse.

(6)        Sound management program. A program of production designed to obtain the greatest net return from the land consistent with its conservation and long‑term improvement.

(7)   Unit. One or more tracts of agricultural land, horticultural land, or forestland. Multiple tracts must be under the same ownership and be of the same type of classification. If the multiple tracts are located within different counties, they must be within 50 miles of a tract qualifying under G.S. 105‑277.3(a).  (1973, c. 709, s. 1; 1975, c. 746, s. 1; 1985, c. 628, s. 1; c. 667, ss. 1, 4; 1987, c. 698, s. 1; 1995, c. 454, s. 1; 1995 (Reg. Sess., 1996), c. 646, s. 17; 1998‑98, s. 24; 2002‑184, s. 1; 2004‑8, s. 1; 2005‑313, ss. 1, 2; 2008‑146, s. 2.1.)

 

 

105‑277.3.  Agricultural, horticultural, and forestland Classifications.

(a)        Classes Defined. The following classes of property are designated special classes of property under authority of Section 2(2) of Article V of the North Carolina Constitution and must be appraised, assessed, and taxed as provided in G.S. 105‑277.2 through G.S. 105‑277.7.

(1)        (Effective for taxes imposed for taxable years beginning before July 1, 2008) Agricultural land. Individually owned agricultural land consisting of one or more tracts, one of which consists of at least 10 acres that are in actual production and that, for the three years preceding January 1 of the year for which the benefit of this section is claimed, have produced an average gross income of at least one thousand dollars ($1,000). Gross income includes income from the sale of the agricultural products produced from the land, any payments received under a governmental soil conservation or land retirement program, and the amount paid to the taxpayer during the taxable year pursuant to P.L. 108‑357, Title VI, Fair and Equitable Tobacco Reform Act of 2004. Land in actual production includes land under improvements used in the commercial production or growing of crops, plants, or animals.

(1)        (Effective for taxes imposed for taxable years beginning on or after July 1, 2008) Agricultural land. Individually owned agricultural land consisting of one or more tracts, one of which satisfies the requirements of this subdivision. For agricultural land used as a farm for aquatic species, as defined in G.S. 106‑758, the tract must meet the income requirement for agricultural land and must consist of at least five acres in actual production or produce at least 20,000 pounds of aquatic species for commercial sale annually, regardless of acreage. For all other agricultural land, the tract must meet the income requirement for agricultural land and must consist of at least 10 acres that are in actual production. Land in actual production includes land under improvements used in the commercial production or growing of crops, plants, or animals.

To meet the income requirement, agricultural land must, for the three years preceding January 1 of the year for which the benefit of this section is claimed, have produced an average gross income of at least one thousand dollars ($1,000). Gross income includes income from the sale of the agricultural products produced from the land, any payments received under a governmental soil conservation or land retirement program, and the amount paid to the taxpayer during the taxable year pursuant to P.L. 108‑357, Title VI, Fair and Equitable Tobacco Reform Act of 2004.

(2)        Horticultural land. Individually owned horticultural land consisting of one or more tracts, one of which consists of at least five acres that are in actual production and that, for the three years preceding January 1 of the year for which the benefit of this section is claimed, have met the applicable minimum gross income requirement. Land in actual production includes land under improvements used in the commercial production or growing of fruits or vegetables or nursery or floral products. Land that has been used to produce evergreens intended for use as Christmas trees must have met the minimum gross income requirements established by the Department of Revenue for the land. All other horticultural land must have produced an average gross income of at least one thousand dollars ($1,000). Gross income includes income from the sale of the horticultural products produced from the land and any payments received under a governmental soil conservation or land retirement program.

(3)        Forestland. Individually owned forestland consisting of one or more tracts, one of which consists of at least 20 acres that are in actual production and are not included in a farm unit.

(b)        (Effective for taxes imposed for taxable years beginning before July 1, 2008) Natural Person Ownership Requirements. In order to come within a classification described in subsection (a) of this section, the land must, if owned by a natural person, also satisfy one of the following conditions:

(1)        It is the owner's place of residence.

(2)        It has been owned by the current owner or a relative of the current owner for the four years preceding January 1 of the year for which the benefit of this section is claimed.

(3)        At the time of transfer to the current owner, it qualified for classification in the hands of a business entity or trust that transferred the land to the current owner who was a member of the business entity or a beneficiary of the trust, as appropriate.

(b)        (Effective for taxes imposed for taxable years beginning on or after July 1, 2008) Individual Ownership Requirements. In order to come within a classification described in subsection (a) of this section, land owned by an individual must also satisfy one of the following conditions:

(1)        It is the owner's place of residence.

(2)        It has been owned by the current owner or a relative of the current owner for the four years preceding January 1 of the year for which the benefit of this section is claimed.

(3)        At the time of transfer to the current owner, it qualified for classification in the hands of a business entity or trust that transferred the land to the current owner who was a member of the business entity or a beneficiary of the trust, as appropriate.

(b1)      (Effective for taxes imposed for taxable years beginning before July 1, 2008) Entity Ownership Requirements. In order to come within a classification described in subsection (a) of this section, the land must, if owned by a business entity or trust, have been owned by the business entity or trust or by one or more of its members or creators, respectively, for the four years immediately preceding January 1 of the year for which the benefit of this section is claimed.

(b1)      (Effective for taxes imposed for taxable years beginning on or after July 1, 2008) Entity Ownership Requirements. In order to come within a classification described in subsection (a) of this section, land owned by a business entity or trust must have been owned by the business entity or trust or by one or more of its members or creators, respectively, for the four years immediately preceding January 1 of the year for which the benefit of this section is claimed.

(b2)      (Effective for taxes imposed for taxable years beginning before July 1, 2008) Exception to Ownership Requirements. Notwithstanding the provisions of subsections (b) and (b1) of this section, land may qualify for classification in the hands of the new owner if all of the conditions listed in either subdivision of this subsection are met, even if the new owner does not meet all of the ownership requirements of subsections (b) and (b1) of this section with respect to the land.

(1)        Exception for assumption of deferred liability. If the land qualifies for classification in the hands of the new owner under the provisions of this subdivision, then the deferred taxes remain a lien on the land under G.S. 105‑277.4(c), the new owner becomes liable for the deferred taxes, and the deferred taxes become payable if the land fails to meet any other condition or requirement for classification. Land qualifies for classification in the hands of the new owner if all of the following conditions are met:

a.         The land was appraised at its present use value at the time title to the land passed to the new owner.

b.         At the time title to the land passed to the new owner, the new owner acquires the land for the purposes of and continues to use the land for the purposes it was classified under subsection (a) of this section while under previous ownership.

c.         The new owner has timely filed an application as required by G.S. 105‑277.4(a) and has certified that the new owner accepts liability for the deferred taxes and intends to continue the present use of the land.

(2)        Exception for expansion of existing unit. If deferred liability is not assumed under subdivision (1) of this subsection, the land qualifies for classification in the hands of the new owner if, at the time title passed to the new owner, the land was being used for the same purpose and was eligible for appraisal at its present‑use value as other land already owned by the new owner and classified under subsection (a) of this section. The new owner must timely file an application as required by G.S. 105‑277.4(a).

(b2)      (Effective for taxes imposed for taxable years beginning on or after July 1, 2008) Exceptions to Ownership Requirements. Notwithstanding the provisions of subsections (b) and (b1) of this section, land may qualify for classification in the hands of the new owner if all of the conditions listed in either subdivision of this subsection are met, even if the new owner does not meet all of the ownership requirements of subsections (b) and (b1) of this section with respect to the land.

(1)        Continued use. If the land qualifies for classification in the hands of the new owner under the provisions of this subdivision, then any deferred taxes remain a lien on the land under G.S. 105‑277.4(c), the new owner becomes liable for the deferred taxes, and the deferred taxes become payable if the land fails to meet any other condition or requirement for classification. Land qualifies for classification in the hands of the new owner if all of the following conditions are met:

a.         The land was appraised at its present use value at the time title to the land passed to the new owner.

b.         The new owner acquires the land and continues to use the land for the purpose for which it was classified under subsection (a) of this section while under previous ownership.

c.         The new owner has timely filed an application as required by G.S. 105‑277.4(a) and has certified that the new owner accepts liability for any deferred taxes and intends to continue the present use of the land.

(2)        Expansion of existing unit. Land qualifies for classification in the hands of the new owner if, at the time title passed to the new owner, the land was not appraised at its present‑use value but was being used for the same purpose and was eligible for appraisal at its present‑use value as other land already owned by the new owner and classified under subsection (a) of this section. The new owner must timely file an application as required by G.S. 105‑277.4(a).

(c)        Repealed by Session Laws 1995, c. 454, s. 2.

(d)        Exception for Conservation Reserve Program. Land enrolled in the federal Conservation Reserve Program authorized by 16 U.S.C. Chapter 58 is considered to be in actual production, and income derived from participation in the federal Conservation Reserve Program may be used in meeting the minimum gross income requirements of this section either separately or in combination with income from actual production. Land enrolled in the federal Conservation Reserve Program must be assessed as agricultural land if it is planted in vegetation other than trees, or as forestland if it is planted in trees.

(d1)      (Effective for taxes imposed for taxable years beginning before July 1, 2010) Exception for Easements on Qualified Conservation Lands Previously Appraised at Use Value. Property that is appraised at its present‑use value under G.S. 105‑277.4(b) shall continue to qualify for appraisal, assessment, and taxation as provided in G.S. 105‑277.2 through G.S. 105‑277.7 as long as the property is subject to an enforceable conservation easement that would qualify for the conservation tax credit provided in G.S. 105‑130.34 and G.S. 105‑151.12, without regard to actual production or income requirements of this section. Notwithstanding G.S. 105‑277.3(b) and (b1), subsequent transfer of the property does not extinguish its present‑use value eligibility as long as the property remains subject to an enforceable conservation easement that qualifies for the conservation tax credit provided in G.S. 105‑130.34 and G.S. 105‑151.12. The exception provided in this subsection applies only to that part of the property that is subject to the easement.

(d1)      (Effective for taxes imposed for taxable years beginning on or after July 1, 2010) Exception for Easements on Qualified Conservation Lands Previously Appraised at Use Value. Property that is appraised at its present‑use value under G.S. 105‑277.4(b) shall continue to qualify for appraisal, assessment, and taxation as provided in G.S. 105‑277.2 through G.S. 105‑277.7 as long as (i) the property is subject to an enforceable conservation easement that would qualify for the conservation tax credit provided in G.S. 105‑130.34 and G.S. 105‑151.12, without regard to actual production or income requirements of this section; and (ii) the taxpayer received no more than seventy‑five percent (75%) of the fair market value of the donated property interest in compensation. Notwithstanding G.S. 105‑277.3(b) and (b1), subsequent transfer of the property does not extinguish its present‑use value eligibility as long as the property remains subject to an enforceable conservation easement that qualifies for the conservation tax credit provided in G.S. 105‑130.34 and G.S. 105‑151.12. The exception provided in this subsection applies only to that part of the property that is subject to the easement.

(d2)      (Effective for taxes imposed for taxable years beginning on or after July 1, 2010) Wildlife Exception. When an owner of land classified under this section does not transfer the land and the land becomes eligible for classification under G.S. 105‑277.15, no deferred taxes are due. The deferred taxes remain a lien on the land and are payable in accordance with G.S. 105‑277.15.

(e)        Exception for Turkey Disease. Agricultural land that meets all of the following conditions is considered to be in actual production and to meet the minimum gross income requirements:

(1)        The land was in actual production in turkey growing within the preceding two years and qualified for present use value treatment while it was in actual production.

(2)        The land was taken out of actual production in turkey growing solely for health and safety considerations due to the presence of Poult Enteritis Mortality Syndrome among turkeys in the same county or a neighboring county.

(3)        The land is otherwise eligible for present use value treatment.

(f)         Sound Management Program for Agricultural Land and Horticultural Land. If the property owner demonstrates any one of the following factors with respect to agricultural land or horticultural land, then the land is operated under a sound management program:

(1)        Enrollment in and compliance with an agency‑administered and approved farm management plan.

(2)        Compliance with a set of best management practices.

(3)        Compliance with a minimum gross income per acre test.

(4)        Evidence of net income from the farm operation.

(5)        Evidence that farming is the farm operator's principal source of income.

(6)        Certification by a recognized agricultural or horticultural agency within the county that the land is operated under a sound management program.

Operation under a sound management program may also be demonstrated by evidence of other similar factors. As long as a farm operator meets the sound management requirements, it is irrelevant whether the property owner received income or rent from the farm operator.

(g)                           Sound Management Program for Forestland. If the owner of forestland demonstrates that the forestland complies with a written sound forest management plan for the production and sale of forest products, then the forestland is operated under a sound management program.  (1973, c. 709, s. 1; 1975, c. 746, s. 2; 1983, c. 821; c. 826; 1985, c. 667, ss. 2, 3, 6.1; 1987, c. 698, ss. 2‑5; 1987 (Reg. Sess., 1988), c. 1044, s. 13.1; 1989, cc. 99, 736, s. 1; 1989 (Reg. Sess., 1990), c. 814, s. 29; 1995, c. 454, s. 2; 1997‑272, s. 1; 1998‑98, s. 22; 2001‑499, s. 1; 2002‑184, s. 2; 2005‑293, s. 1; 2005‑313, s. 3; 2007‑484, s. 43.7T(c); 2007‑497, s. 3.1; 2008‑146, s. 2.2; 2008‑171, ss. 4, 5.)

 

 

105‑277.4.  Agricultural, horticultural and forestland Application; appraisal at use value; appeal; deferred taxes.

(a)        Application. Property coming within one of the classes defined in G.S. 105‑277.3 is eligible for taxation on the basis of the value of the property in its present use if a timely and proper application is filed with the assessor of the county in which the property is located. The application must clearly show that the property comes within one of the classes and must also contain any other relevant information required by the assessor to properly appraise the property at its present‑use value. An initial application must be filed during the regular listing period of the year for which the benefit of this classification is first claimed, or within 30 days of the date shown on a notice of a change in valuation made pursuant to G.S. 105‑286 or G.S. 105‑287. A new application is not required to be submitted unless the property is transferred or becomes ineligible for use‑value appraisal because of a change in use or acreage. An application required due to transfer of the land may be submitted at any time during the calendar year but must be submitted within 60 days of the date of the property's transfer.

(a1)      Late Application. Upon a showing of good cause by the applicant for failure to make a timely application as required by subsection (a) of this section, an application may be approved by the board of equalization and review or, if that board is not in session, by the board of county commissioners. An untimely application approved under this subsection applies only to property taxes levied by the county or municipality in the calendar year in which the untimely application is filed. Decisions of the county board may be appealed to the Property Tax Commission.

(b)        Appraisal at Present‑use Value. Upon receipt of a properly executed application, the assessor must appraise the property at its present‑use value as established in the schedule prepared pursuant to G.S. 105‑317. In appraising the property at its present‑use value, the assessor must appraise the improvements located on qualifying land according to the schedules and standards used in appraising other similar improvements in the county. If all or any part of a qualifying tract of land is located within the limits of an incorporated city or town, or is property annexed subject to G.S. 160A‑37(f1) or G.S. 160A‑49(f1), the assessor must furnish a copy of the property record showing both the present‑use appraisal and the valuation upon which the property would have been taxed in the absence of this classification to the collector of the city or town. The assessor must also notify the tax collector of any changes in the appraisals or in the eligibility of the property for the benefit of this classification. Upon a request for a certification pursuant to G.S. 160A‑37(f1) or G.S.160A‑49(f1), or any change in the certification, the assessor for the county where the land subject to the annexation is located must, within 30 days, determine if the land meets the requirements of G.S. 160A‑37(f1)(2) or G.S. 160A‑49(f1)(2) and report the results of its findings to the city.

(b1)      Appeal. Decisions of the assessor regarding the qualification or appraisal of property under this section may be appealed to the county board of equalization and review or, if that board is not in session, to the board of county commissioners. An appeal must be made within 60 days after the decision of the assessor. If an owner submits additional information to the assessor pursuant to G.S. 105‑296(j), the appeal must be made within 60 days after the assessor's decision based on the additional information. Decisions of the county board may be appealed to the Property Tax Commission.

(c)        (Effective for taxes imposed for taxable years beginning before July 1, 2008) Deferred Taxes. Land meeting the conditions for classification under G.S. 105‑277.3 must be taxed on the basis of the value of the land for its present use. The difference between the taxes due on the present‑use basis and the taxes that would have been payable in the absence of this classification, together with any interest, penalties, or costs that may accrue thereon, are a lien on the real property of the taxpayer as provided in G.S. 105‑355(a). The difference in taxes must be carried forward in the records of the taxing unit or units as deferred taxes. The taxes become due and payable when the land fails to meet any condition or requirement for classification. Failure to have an application approved is ground for disqualification. The tax for the fiscal year that opens in the calendar year in which deferred taxes become due is computed as if the land had not been classified for that year, and taxes for the preceding three fiscal years that have been deferred are immediately payable, together with interest as provided in G.S. 105‑360 for unpaid taxes. Interest accrues on the deferred taxes due as if they had been payable on the dates on which they originally became due. If only a part of the qualifying tract of land fails to meet a condition or requirement for classification, the assessor must determine the amount of deferred taxes applicable to that part and that amount becomes payable with interest as provided above. Upon the payment of any taxes deferred in accordance with this section for the three years immediately preceding a disqualification, all liens arising under this subsection are extinguished. The deferred taxes for any given year may be paid in that year without the qualifying tract of land becoming ineligible for deferred status.

(c)        (Effective for taxes imposed for taxable years beginning on or after July 1, 2008) Deferred Taxes. Land meeting the conditions for classification under G.S. 105‑277.3 must be taxed on the basis of the value of the land for its present use. The difference between the taxes due on the present‑use basis and the taxes that would have been payable in the absence of this classification, together with any interest, penalties, or costs that may accrue thereon, are a lien on the real property of the taxpayer as provided in G.S. 105‑355(a). The difference in taxes must be carried forward in the records of the taxing unit or units as deferred taxes. The deferred taxes for the preceding three fiscal years are due and payable in accordance with G.S. 105‑277.1F when the property loses its eligibility for deferral as a result of a disqualifying event. A disqualifying event occurs when the land fails to meet any condition or requirement for classification or when an application is not approved.

(d)        Exceptions. Notwithstanding the provisions of subsection (c) of this section, if property loses its eligibility for present use value classification solely due to one of the following reasons, no deferred taxes are due and the lien for the deferred taxes is extinguished:

(1)        There is a change in income caused by enrollment of the property in the federal conservation reserve program established under 16 U.S.C. Chapter 58.

(2)        The property is conveyed by gift to a nonprofit organization and qualifies for exclusion from the tax base pursuant to G.S. 105‑275(12) or G.S. 105‑275(29).

(3)        The property is conveyed by gift to the State, a political subdivision of the State, or the United States.

(e)                           Repealed by Session Laws 1997‑270, s. 3, effective July 3, 1997.  (1973, c. 709, s. 1; c. 905; c. 906, ss. 1, 2; 1975, c. 62; c. 746, ss. 3‑7; 1981, c. 835; 1985, c. 518, s. 1; c. 667, ss. 5, 6; 1987, c. 45, s. 1; c. 295, s. 5; c. 698, s. 6; 1987 (Reg. Sess., 1988), c. 1044, s. 13.2; 1995, c. 443, s. 4; c. 454, s. 3; 1997‑270, s. 3; 1998‑98, s. 23; 1998‑150, s. 1; 2001‑499, s. 2; 2002‑184, s. 3; 2005‑313, s. 4; 2006‑30, s. 4; 2008‑35, s. 2.3.)

 

 

105‑277.5.  Agricultural, horticultural and forestland Notice of change in use.

Not later than the close of the listing period following a change which would disqualify all or a part of a tract of land receiving the benefit of this classification, the property owner shall furnish the assessor with complete information regarding such change. Any property owner who fails to notify the assessor of changes as aforesaid regarding land receiving the benefit of this classification shall be subject to a penalty of ten percent (10%) of the total amount of the deferred taxes and interest thereon for each listing period for which the failure to report continues. (1973, c. 709, s. 1; 1975, c. 746, s. 8; 1987, c. 45, s. 1.)

 

 

105‑277.6.  Agricultural, horticultural and forestland Appraisal; computation of deferred tax.

(a)        In determining the amount of the deferred taxes herein provided, the assessor shall use the appraised valuation established in the county's last general revaluation except for any changes made under the provisions of G.S. 105‑287.

(b)        In revaluation years, as provided in G.S. 105‑286, all property entitled to classification under G.S. 105‑277.3 shall be reappraised at its true value in money and at its present use value as of the effective date of the revaluation. The two valuations shall continue in effect and shall provide the basis for deferred taxes until a change in one or both of the appraisals is required by law.  The present use‑value schedule, standards, and rules shall be used by the tax assessor to appraise property receiving the benefit of this classification until the next general revaluation of real property in the county as required by G.S. 105‑286.

(c)        Repealed by Session Laws 1987, c. 295, s. 2. (1973, c. 709, s. 1; 1975, c. 746, ss. 9, 10; 1987, c. 45, s. 1, c. 295, s. 2.)

 

 

105‑277.7.  Use‑Value Advisory Board.

(a)        Creation and Membership. The Use‑Value Advisory Board is established under the supervision of the Agricultural Extension Service of North Carolina State University. The Director of the Agricultural Extension Service of North Carolina State University shall serve as the chair of the Board. The Board shall consist of the following additional members, to serve ex officio:

(1)        A representative of the Department of Agriculture and Consumer Services, designated by the Commissioner of Agriculture.

(2)        A representative of the Division of Forest Resources of the Department of Environment and Natural Resources, designated by the Director of that Division.

(3)        A representative of the Agricultural Extension Service at North Carolina Agricultural and Technical State University, designated by the Director of the Extension Service.

(4)        A representative of the North Carolina Farm Bureau Federation, Inc., designated by the President of the Bureau.

(5)        A representative of the North Carolina Association of Assessing Officers, designated by the President of the Association.

(6)        The Director of the Property Tax Division of the North Carolina Department of Revenue or the Director's designee.

(7)        A representative of the North Carolina Association of County Commissioners, designated by the President of the Association.

(8)        A representative of the North Carolina Forestry Association, designated by the President of the Association.

(b)        Staff. The Agricultural Extension Service at North Carolina State University must provide clerical assistance to the Board.

(c)        Duties. The Board must annually submit to the Department of Revenue a recommended use‑value manual. In developing the manual, the Board may consult with federal and State agencies as needed. The manual must contain all of the following:

(1)        The estimated cash rental rates for agricultural lands and horticultural lands for the various classes of soils found in the State. The rental rates must recognize the productivity levels by class of soil or geographic area, and the crop as either agricultural or horticultural. The rental rates must be based on the rental value of the land to be used for agricultural or horticultural purposes when those uses are presumed to be the highest and best use of the land. The recommended rental rates may be established from individual county studies or from contracts with federal or State agencies as needed.

(2)        The recommended net income ranges for forestland furnished to the Board by the Forestry Section of the North Carolina Cooperative Extension Service. These net income ranges may be based on up to six classes of land within each Major Land Resource Area designated by the United States Soil Conservation Service. In developing these ranges, the Forestry Section must consider the soil productivity and indicator tree species or stand type, the average stand establishment and annual management costs, the average rotation length and timber yield, and the average timber stumpage prices.

(3)        The capitalization rates adopted by the Board prior to February 1 for use in capitalizing incomes into values. The capitalization rate for forestland shall be nine percent (9%). The capitalization rate for agricultural land and horticultural land must be no less than six percent (6%) and no more than seven percent (7%). The incomes must be in the form of cash rents for agricultural lands and horticultural lands and net incomes for forestlands.

(4)        The value per acre adopted by the Board for the best agricultural land. The value may not exceed one thousand two hundred dollars ($1,200).

(5)        Recommendations concerning any changes to the capitalization rate for agricultural land and horticultural land and to the maximum value per acre for the best agricultural land and horticultural land based on a calculation to be determined by the Board. The Board shall annually report these recommendations to the Revenue Laws Study Committee and to the President Pro Tempore of the Senate and the Speaker of the House of Representatives.

(6)        Recommendations concerning requirements for horticultural land used to produce evergreens intended for use as Christmas trees when requested to do so by the Department. (1973, c. 709, s. 1; 1975, c. 746, s. 11; 1985, c. 628, s. 2; 1989, c. 727, s. 218(44); c. 736, s. 2; 1997‑261, s. 109; 1997‑443, s. 11A.119(a); 2002‑184, s. 4; 2005‑313, s. 5; 2005‑386, s. 1.3.)