§ 105-277.17. (Effective for taxes imposed for taxable years beginning on or after July 1, 2010) Taxation of community land trust property. - North Carolina Statutes

§ 105‑277.17. (Effective for taxes imposed for taxable years beginning on or after July 1,2010) Taxation of community land trust property.

(a)        Classification. – Communityland trust property is designated a special class of property under Section2(2) of Article V of the North Carolina Constitution and must be appraised,assessed, and taxed in accordance with this section.

(b)        Definitions. – Thefollowing definitions apply in this section:

(1)        Community land trustdeveloper. – A nonprofit housing development entity that is an exemptorganization under section 501(c)(3) of the Code and that transfers communityland trust property to a qualifying owner.

(2)        Community land trustproperty. – Improvements to real property that meet all of the followingconditions:

a.         A fee or leaseholdinterest in the improvements is transferred subject to resale restrictionscontained in a long‑term ground lease of not less than 99 years.

b.         The community landtrust developer retains an interest in the property pursuant to the deed ofconveyance or the long‑term ground lease.

(3)        Ground lease. – Alease between the community land trust developer of a dwelling site, aslandlord, and the owner or lessee of a permanent residence constructed on thedwelling site, as tenant. The leasehold interest of the tenant in the dwellingsite includes an undivided interest and nonexclusive easement for ingress andegress to the dwelling site and for the use and enjoyment of the common areasand community facilities, if any.

(4)        Income. – Defined inG.S. 105‑277.1(b).

(5)        Initial investmentbasis. – The most recent sales price, excluding any silent mortgage amount, ofcommunity land trust property.

(6)        Qualifying owner. – ANorth Carolina resident who (i) occupies, as owner or lessee, community landtrust property as a permanent residence and (ii) is part of a household, theannual income of which at the time of transfer and adjusted for family size isnot more than one hundred percent (100%) of the local area median family incomeas defined by the most recent figures published by the U.S. Department ofHousing and Urban Development.

(7)        Resale restrictions.– Binding restrictions that affect the price at which a qualifying owner'sinterest in community land trust property can be transferred for value to asubsequent qualifying owner or the community land trust developer.

(8)        Silent mortgageamount. – The amount of debt incurred by a qualifying owner that is representedby a deed of trust or leasehold deed of trust on community land trust propertyand that earns no interest and requires no repayment prior to satisfaction ofany interest‑earning mortgage or a subsequent transfer of the property,whichever occurs first.

(9)        Transfer. – Anymethod of disposing of an interest in real property.

(c)        Valuation. – Theinitial appraised value of community land trust property in the year theproperty first qualifies for classification under this section is the initialinvestment basis. In subsequent general reappraisals, the value of thecommunity land trust property shall not exceed the sum of the restrictedcapital gain amount and the initial investment basis. The restricted capitalgain amount is the market value of the community land trust property that wouldbe established for the current general reappraisal if not for thisclassification (i) adjusted to the maximum sales price permitted pursuant tothe resale restrictions effective for a hypothetical sale occurring on the dateof reappraisal, if less, and (ii) subtracting the initial investment basis andany silent mortgage amount.  (2009‑481, s. 1.)