Exclusion for Improvements to Residential and Commercial Property
(NCGS 105-277.02)
The exclusion applies only to property owners who qualify as builders.  That term is defined by North Carolina General Statute to mean, "a taxpayer engaged in the business of buying real property, making improvements to it, and reselling it."
 
For both residential and commercial properties, the exclusion applies to improvements made on or after July 1, 2015, and applies to taxes levied for tax years beginning on or after July 1, 2016. Those restrictions eliminate from eligibility any residential and commercial improvements that existed as of July 1, 2015, but improvements made in the second half of 2015 may qualify for the exclusion for tax years 2016 and beyond.
 
A builder must submit exclusion applications annually. Completed applications must be filed with the Revenue Department during the regular listing period, which is from January 1 through January 31 each year. Late applications may be considered for good cause through the last day of the calendar year in which the tax is levied. A late application received after the calendar year ends will not be accepted and cannot be considered for approval or denial for any reason or circumstance. One application may be submitted for multiple properties in a development, but the application must include the Real Estate ID for each property for which you seek the exclusion. Separate applications must be filed for lots owned by different ownerships. This requirement includes Limited Liability Companies or other corporate structures even when the principle members are the same.

Determination of good cause is made on a case-by-case basis, taking into account all pertinent facts and circumstances. Upon a showing of verifiable good cause by the applicant, an application for exemption or exclusion filed after the due date may be considered by the board of county commissioners.
Examples of good cause may include:
    • Physical or mental illness, infirmity or disability that would reasonably affect the taxpayer’s ability to apply timely
    • Death of the taxpayer or an immediate family member
    • Active duty military deployment
Taxpayer neglect, oversight or lack of awareness regarding due dates will not constitute good cause for a late exemption or exclusion application. The burden of proving both verifiable good cause for the late application and eligibility for the requested exemption or exclusion lies with the taxpayer.

When real property is transferred from an exempt or partially exempt owner to a taxable owner prior to July 1, that property is taxable for the entire year as if the taxable owner owned the property as of January 1.

 
Residential Property:
Excludes from taxation the increase in property value attributable to:
  1. Subdivision of a parcel for future residential construction
  2. Non-structural improvements (grading, streets, utilities, etc.) for future residential construction
  3. Construction of a new single-family home or duplex
To be eligible, the property must continue to be owned by a builder, must not be occupied by a tenant, and must not be used as a model home or for any other commercial purposes. Because the exclusion is aimed at new construction, renovations to an existing residence cannot qualify.
 
The exclusion is limited to three years from the date the property was first subject to be listed by the builder. Remember that improvements must be on January 1, regardless of the stage of completion. If a property is improved in stages, each improvement might qualify for a separate exclusion based on its own listing date.
 
Commercial Property:
Unlike residential property, commercial property may benefit from the new exclusion for a maximum of five years rather than three, but the commercial property exclusion covers only the increase in value attributable to subdivision or non-structural improvements (grading, streets, utilities, etc.). Any improvement that requires the issuance of a building permit terminates eligibility for the exclusion.