HomeMy WebLinkAboutAgenda - 09-20-2007-4a
Changes to the Homestead Exemption Program
On August 2, 2007, the General Assembly ratified House Bill 1499. The bullet points below
highlight changes to the Homestead Exemption Program.
~;. Effective January 1, 2008, the following changes will take place with regard to the
current Homestead Exemption program .
o Taxpayer Income Thresholds -Currently qualification for Homestead
Exemption is based on Adjusted Gross Income (AGI is defined as income
(including wages, interest, capital gains, income from retirement accounts,
alimony paid to you) adjusted downward by specific deductions (including
contributions to deductible retirement accounts, alimony paid by you); but
not including standard and itemized deductions.
^ Effective January 1, 2008, qualification for the program will be
based on Gross Income (Gross Income is defined as income
(including wages, interest, capital gains, income from retirement
accounts, alimony paid to you) not adjusted downward by specific
deductions.
• Maximum Qualifying Income -Currently, the maximum qualifying
income totals $20,000 (adjusted gross income)
o Effective January 1, 2008, the maximum income equals $25,000
(gross income)
• Taxpayer Reapplication Process -Since House Bill 1499 changes the
income base from Adjusted Gross Income to Gross Income, all taxpayers
who currently qualify for the exemption will need to re-apply since their
adjusted income may be less than their gross income
o Currently there are about 1,000 property owners in Orange County
who qualify for Homestead Exemption based on their Adjusted
Gross Income
o The Tax Assessor's office plans to contact taxpayers who are
currently in the program to make them aware of the reapplication
process
o All participants will be asked to file new applications for exemption
between now and June 2008
o It is likely that some percentage of homeowners who currently
qualify for the exemption will no longer qualify.
• 3R Fee Exerlnption -Currently the 3R qualification mirrors the existing
Homestead Exemption qualifications
o Beginning January 1, 2008, if.the qualification process mirrors the
Homestead Exemption outlined in House Bill 1499, it is likely that
fewer taxpayers would qualify for 3R exemption
Property Owner Qualification for Homestead Exemption
The chart below compares current Homestead Exemption thresholds with those that will become effective January 1, 2008
Prior to Janua 1 2008 Be innin Janua 1 2008
(i) 65 years of age or totally and (1) 65 years of age or totally and
ermanentl disabled ermanentl disabled
Qualifying Homeowner (2) income for preceding calendar year (2) Income for preceding calendar year
of not more than the income eligibility of not more than the income eligibility
limit limit
3 North Carolina resident 3 North Carolina resident
Adjusted Gross Income (Federal
Income Tax Retum) -Adjusted Gross
Income (AGI) is defined as income Gross Income (Federal Iricome Tax
(including wages, interest, capital gains, Return) -Gross Income is defined as
income from retirement accounts,
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d d
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id
d income (including wages, interest,
Income Determination ownwar
alimony pa
to you) a
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e capital gains, income from retirement
by specific deductions (including accounts, alimony paid to you) not
contributions to deductible retirement adjusted downward by specific
accounts, alimony paid by you, health deductions
savings account deductions); but not
including standard and itemized
deductions.
Maximum Qualifying Income Adjusted.Gross Income of $20,000 Gross Income of $25,000
The chart below compares the impact of House Bill 1499 on a 65 year old or older taxpayer and a qualifying disbled homeowner who would
qualify for Homestead Exemption under the current legislation based on his/her AGI but would not qualify beginning January 1, 2008 based on
his/her gross income.
Prior to Janua 1, 2008 Be innin Janua 1, 2008
Income $19,000 Adjusted Gross Income $25,900 Gross Income
Qualifies for Homestead Yes No
Exemption
Total Valuation of Home $200 000 $200,000
Value of Homestead
Exemption (equivalent to 50% ($100,000) $0
of total valuation
Taxable Valuation After
Allowing for Homestead $100,000 $200,000
Exem tion
Taxpayer's County Tax Bill
$950
$1,900
Liabili