Tax Deferments

2015 Present Use Value Manual

One may hear deferments referred to as use value assessment, present use value, or just simply a "tax break". Properly referred to as use value, the term means the value of land in it's current use as agricultural land, horticultural land or forestland, and is based solely on it's ability to produce income.

There are three basic programs involved:

Agricultural


Agricultural land means land that is a part of a farm unit actively engaged in the commercial production or growing of crops, plants, or animals under a sound management program. Agricultural land includes woodland and wasteland. The requirements for an agricultural deferment are as follows:

  • May consist of more than one tract of agricultural land, but at least one of the tracts must meet the requirements and each tract must be under a sound management program.
  • One tract must consist of at least 10 acres that are in actual production.
  • Must have produced an average gross income of at least one thousand dollars ($1,000) for the three years preceding January 1 of the year in which this benefit is claimed. Gross income includes income from the sale of the agricultural products produced from the land and any payments received under a governmental soil conservation or land retirement program.
  • If individually owned, the property must be the owner's residence or have been owned by the current owner or a relative of the current owner for four years preceding January 1 of the year in which this benefit is claimed. There are exceptions to the ownership requirements under certain conditions, but the new owner becomes liable for deferred taxes if the land fails to meet requirements for classification, see G.S. 105-277.2 for details.
Forestland

Forestland means land that is 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 part of the forest unit, but the wasteland included in the unit shall be appraised under the use value schedules as wasteland. The requirements for a forestland deferment are as follows:
  • May consist of more than one tract of forestland, but at least one of the tracts must meet the requirements and each tract must be under a sound management program.
  • One tract must consist of at least 20 acres that are in actual production and are not included in a farm unit.
  • If individually owned, the property must be the owner's residence or have been owned by the current owner or a relative of the current owner for four years preceding January 1 of the year in which the benefit is claimed. For exceptions to ownership requirements see G.S. 105-277.2 for details.
Horticultural

Horticultural land means 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 land included in the unit shall be appraised under the use value schedules as woodland or wasteland. The requirements for a horticultural deferment are as follows:
  • May consist of more than one tract of horticultural land, but at least one of the tracts must meet the requirements and each tract must be under a sound management program.
  • One tract must consist of at least 5 acres that are in actual production.
  • Must have produced an average gross income of at least one thousand dollars ($1,000) for the three years preceding January 1 of the year in which this benefit is claimed. 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.
  • If individually owned, the property must be the owner's residence or have been owned by the current owner or a relative of the current owner for four years preceding January 1 of the year in which the benefit is claimed. For exceptions to ownership requirements see G.S. 105-277.2 for details.
Historical

Historical property is real property designated as a historic structure or site by a local ordinance adopted by the Historical Property Commission. Property that is classified as historical shall be taxed on the basis of fifty percent (50%) of the true appraised value. After property has been designated as historical property, the owner is required to contact the local Tax Assessor's Office for a historical deferment application.

The deferred taxes will not become due unless or until the property loses it's eligibility for the benefit of this classification. This could occur because of a change in an ordinance designation or a change in the property which causes it's historical significance to be lost or substantially impaired.

The following applies to agricultural, forestland, and horticultural deferments:

If property loses it's eligibility for any reason, deferred taxes become due for the current year plus three previous years, plus interest for all prior years. If only a part of the qualifying tract loses it's eligibility, a determination shall be made of the amount of deferred taxes applicable to that part, and that amount shall become payable with interest.

If additional information is needed, please contact the Tax Assessor's Office in the county in which you live. These laws apply to all of North Carolina.