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This alert, from Desmond G. Sheridan, concerns property tax deferral for home builders on unsold inventory.

 

A bill (House Bill 852) to benefit homebuilders with unsold inventory has been passed by the North Carolina General Assembly and is now under consideration by the Governor.

 
Here's how it would work: a builder of residences (presumably including condominiums) could defer the property taxes on an unsold residence for up to 3 years (ending in 2015).  The taxes would be due when the residence is sold or at the close of 3 years of deferral, whichever happens first.  The deferral would only apply to completed residences and not to lots or homes under construction.  The first year a deferral could begin is 2010 and the last year a 3 year deferral could begin is 2013.  This means that all of the deferred taxes will be due, at the latest, in 2015.

In Greensboro, the tax on a $500,000 residence would be approximately $6,862.  Thus, if the tax were deferred for 3 years, the builder would have a cash flow saving of $20,586.  Again, the tax is only deferred and would be payable when the house is sold.

The bill includes protections against lenders who might try to force the tax to be paid rather than deferred.

Assuming Governor Purdue signs this bill, North Carolina home builders will have a significant tax benefit starting in 2010.  While the bill does not actually reduce anyone's tax obligation, it should provide an important break for those with unsold inventory.

 

A link to the bill is below.

http://www.ncga.state.nc.us/Sessions/2009/Bills/House/PDF/H852v3.pdf