A BILL TO BE ENTITLED
AN ACT to create a circuit breaker property tax benefit.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 105‑277.1(b) is amended by adding a new subdivision to read:
"(b)	Definitions. – The following definitions apply in this section:
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(3a)	Property tax relief. – The property tax homestead exclusion provided in this section or the property tax homestead circuit breaker provided in G.S. 105‑277.1B.
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SECTION 2.  G.S. 105‑277.1 is amended by adding a new subsection to read:
"§ 105‑277.1.  Property tax homestead exclusion.
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(e)	Election. – An owner who qualifies for both kinds of property tax relief may elect the property tax homestead circuit breaker under G.S. 105‑277.1B instead of the property tax homestead exclusion provided in this section. When property is owned by two or more persons, each person must qualify for both kinds of property tax relief and must elect the property tax homestead circuit breaker in order for the property tax homestead circuit breaker to be allowed instead of the property tax homestead exclusion."
SECTION 3.  Article 12 of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105‑277.1B.  Property tax homestead circuit breaker.
(a)	Classification. – A permanent residence owned and occupied by a qualifying owner is designated a special class of property under Article V, Section 2(2) of the North Carolina Constitution and is taxable in accordance with this section.
(b)	Definitions. – The definitions provided in G.S. 105‑277.1 apply to this section.
(c)	Income Eligibility Limit. – The income eligibility limit provided in G.S. 105‑277.1(a2) applies to this section.
(d)	Qualifying Owner. – For the purpose of qualifying for the property tax homestead circuit breaker under this section, a qualifying owner is an owner who meets all of the following requirements as of January 1 preceding the taxable year for which the benefit is claimed:
(1)	The owner has an income for the preceding calendar year of not more than the income eligibility limit specified in subsection (c) of this section.
(2)	The owner has occupied the property as a permanent residence for at least five years.
(3)	The owner is a North Carolina resident.
(e)	Tax Limitation. – A qualifying owner may defer the portion of tax imposed on his or her permanent residence if it exceeds a percentage of the qualifying owner's income as provided in this section.
	Income	Percentage
Less than the income eligibility limit	4.0%
100% to 150% of the income eligibility limit	5.0%(f)	Temporary Absence. – An otherwise qualifying owner does not lose the benefit of this circuit breaker because of a temporary absence from his or her permanent residence for reasons of health, or because of an extended absence while confined to a rest home or nursing home, so long as the residence is unoccupied or occupied by the owner's spouse or other dependent.
(g)	Deferred Taxes. – A residence meeting the conditions for classification under this section must be taxed in accordance with subsection (e) of this section. The difference between the taxes due under this section and the taxes that would have been payable in the absence of this section, 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. Payment of taxes deferred under this section may be deferred until the death of the owner or until the residence is transferred, at which time the full amount of deferred taxes, together with any interest, penalties, or costs that may have accrued thereon, becomes due. The tax for the fiscal year that opens in a calendar year in which deferred taxes become due is computed as if the property was not eligible for property tax relief under this section, 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. The amount due under this subsection must be paid within nine months after the date of death or transfer, unless the residence is transferred to the former owner's spouse and the spouse qualifies for tax deferral under this section and occupies the property as his or her permanent residence, in which case the spouse may elect to continue deferring payment of the tax. 
If the owner of a tax‑deferred residence does not qualify under this section for deferral as of January 1 preceding a taxable year, the owner may not defer any additional property taxes that year under this section, but the deferred taxes from earlier years do not become due because of the owner's failure to qualify for the current year.
Except as provided in subsection (f) of this section, in any year in which the owner of a tax‑deferred residence no longer occupies the residence as his or her permanent residence, the full amount of deferred taxes, together with any interest, penalties, or costs that may have accrued thereon, becomes due and is due and payable at the same time the tax levied on the residence in that year is otherwise due.
(h)	Annual Notification. –  On or before September 1 of each year, the assessor shall notify each residence owner to whom a tax deferral has previously been granted of the accumulated sum of deferred taxes and interest.
(i)	Prepayment. – All or part of the deferred taxes and accrued interest may be paid to the tax collector at any time. Any partial payment is applied first to accrued interest. A residence owner to whom a tax deferral has previously been granted may revoke the application for deferral at any time by notifying the assessor in writing.
(j)	Payment by Another. – A mortgagee or trustee that elects to pay any tax deferred by the owner of a residence subject to a mortgage or deed of trust does not acquire a right to foreclose as a result of the election.
(k)	Anti‑Deferral Clauses Void. – Except for requirements dictated by federal law or regulation, any provision in a mortgage, deed of trust, or other agreement that prohibits the owner from deferring taxes on property under this section is void.
(l)	Construction. – This section does not affect the attachment of a lien for personal property taxes against a tax‑deferred residence.
(m)	Application. – An application for property tax relief provided by this section should be filed during the regular listing period, but may be filed and must be accepted at any time up to and through June 1 preceding the tax year for which the relief is claimed. Persons may apply for this property tax relief by entering the appropriate information on a form made available by the assessor under G.S. 105‑282.1.
(n)	Multiple Ownership. – When a permanent residence is owned and occupied by two or more persons other than husband and wife, no property tax homestead circuit breaker is allowed unless all of the owners qualify and elect to defer taxes under this section."
SECTION 4.  G.S. 150‑282.1(a)(2) reads as rewritten:
"(2)	Single application required. – An owner of one or more of the following properties eligible for a property tax benefit must file an application for the benefit to receive it. Once the application has been approved, the owner does not need to file an application in subsequent years unless new or additional property is acquired or improvements are added or removed, necessitating a change in the valuation of the property, or there is a change in the use of the property or the qualifications or eligibility of the taxpayer necessitating a review of the benefit.
a.	Property exempted from taxation under G.S. 105‑278.3, 105‑278.4, 105‑278.5, 105‑278.6, 105‑278.7, or 105‑278.8.
b.	Special classes of property excluded from taxation under G.S. 105‑275(3), (7), (8), (12), (17), (18), (19), (20), (21), (35), (36), (38), (39), or (41) or under G.S. 131A‑21.
c.	Special classes of property classified for taxation at a reduced valuation under G.S. 105‑277(h), 105‑277.1, 105‑277.10, 105‑277.13, 105‑278.
d.	Property owned by a nonprofit homeowners' association but where the value of the property is included in the appraisals of property owned by members of the association under G.S. 105‑277.8.
e.	Special classes of property eligible for tax relief under G.S. 105‑277.1B."
SECTION 5.  G.S. 105‑309(f) reads as rewritten:
"(f)	The assessor must print a homestead tax relief notice on each abstract or on an information sheet distributed with the abstract. The abstract or sheet must include the address and telephone number of the assessor below the notice required by this section. The notice must be in the form required by the Department of Revenue designed to notify the taxpayer of his or her rights and responsibilities under the homestead property tax exclusion provided in G.S. 105‑277.1 and the property tax homestead circuit breaker provided in G.S. 105‑277.1B.
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SECTION 6.  This act is effective for taxes imposed for taxable years beginning on or after July 1, 2008.