GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
S D
SENATE BILL DRS45332-MCf-124A
Short Title: Incent Development Finance District Funding. (Public)
Sponsors: Senators Lazzara and Johnson (Primary Sponsors).
Referred to:
*DRS45332 -MCf-124A*
A BILL TO BE ENTITLED 1
AN ACT TO GROW THE PROPERTY TAX BASE OF UNITS OF LOCAL GOVERNMENT 2
BY FACILITATING PRIVATE DEVELOPER INVOLVEMENT IN CERTAIN PROJECT 3
DEVELOPMENTS. 4
The General Assembly of North Carolina enacts: 5
SECTION 1. G.S. 105-277.1D is reenacted as it existed immediately before its 6
repeal and reads as rewritten: 7
"§ 105-277.1D. Inventory property tax deferral. 8
(a) Classification. – A residencequalified improvement (i) constructed by a builder and 9
owned by the builder or a business entity of which the builder is a member, as defined in 10
G.S. 105-277.2, (ii) located in an incentive district (iii) used for a purpose set forth in 11
G.S. 159-103 is designated a special class of property under Section 2(2) of Article V of the 12
North Carolina Constitution and is taxable in accordance with this section. For purposes of this 13
section, a "residence" is anthe following definitions apply: 14
(1) Incentive district. – An area (i) designated by a developer, (ii) submitted for 15
approval to the governing body of the unit of local government in which the 16
area is located, (iii) determined, by that governing body, to be an area for 17
which the unit could apply for project development financing debt instruments 18
pursuant to Article 6 of Chapter 159, and (iv) approved by the governing body 19
as an incentive district. An incentive district may comprise no more than five 20
percent (5%) of the local government unit's total area. 21
(2) Qualified improvement. – An improvement, other than remodeling, 22
renovating, rehabilitating, or refinishing, by a builder to real property that is 23
intended to be sold and used as an individual's residence, that is unoccupied, 24
and for which a certificate of occupancy authorized by law has been 25
issued.provided in this subsection. 26
(b) Deferred Taxes. – An owner may defer the portion of tax imposed on real property 27
that represents the increase in value of the property attributable solely to improvements resulting 28
from the construction qualified improvement by the builder of a residence on the property. The 29
difference between the taxes due under this section and the taxes that would have been payable 30
in the absence of this section are a lien on the real property of the taxpayer as provided in 31
G.S. 105-355(a). The difference in taxes for the fiscal years year preceding the current tax year 32
shall be carried forward in the records of the taxing unit or units as deferred taxes. The deferred 33
taxes are due and payable in accordance with G.S. 105-277.1F when the property loses its 34
eligibility for deferral because of the occurrence of a disqualifying event. A disqualifying event 35
occurs when a certificate of occupancy is issued for the qualified improvement.at the earliest of 36
FILED SENATE
Mar 25, 2025
S.B. 695
PRINCIPAL CLERK General Assembly Of North Carolina Session 2025
Page 2 DRS45332-MCf-124A
(i) when the owner transfers the residence, (ii) when the residence is occupied by the owner or 1
by someone other than the owner with the owner's consent, (iii) five years from the time the 2
improved property was first subject to being listed for taxation by the owner, or (iv) three years 3
from the time the improved property first received the property tax benefit provided by this 4
section. On or before September 1 of each year, the collector shall notify each owner to whom a 5
tax deferral has previously been granted of the accumulated sum of deferred taxes and interest. 6
(c) Creditor Limitations. – A mortgagee or trustee that elects to pay any tax deferred by 7
the owner subject to a mortgage or deed of trust does not acquire a right to foreclose as a result 8
of the election. Except for requirements dictated by federal law or regulation, any provision in a 9
mortgage, deed of trust, or other agreement that prohibits the owner from deferring taxes on 10
property under this section is void. 11
(d) Construction. – This section does not affect the attachment of a lien for personal 12
property taxes against a tax-deferred residence. 13
(e) Application. – An application for property tax relief provided by this section should 14
be filed during the regular listing period but may be filed after the regular listing period upon a 15
showing of good cause by the applicant for failure to make a timely application, as determined 16
and approved by the board of equalization and review or, if that board is not in session, by the 17
board of county commissioners. An untimely application approved under this subsection applies 18
only to property taxes levied by the county or municipality in the calendar year in which the 19
untimely application is filed. Decisions of the county board may be appealed to the Property Tax 20
Commission. Persons may apply for this property tax relief by entering the appropriate 21
information on a form made available by the assessor under G.S. 105-282.1." 22
SECTION 2. This act is effective for taxes imposed for taxable years beginning on 23
or after July 1, 2025. 24