Public Education Session August 21, 2008 Introductions Tax - - PowerPoint PPT Presentation

Public Education Session

August 21, 2008

Introductions

• Tax Administrator—Dwane Brinson
• Tax Collection Manager—Denette Fitzpatrick
• Tax Listing Manager—Mary Yow
• Tax Appraisal Manager—Lisa Faulkner

Outline

• Session 1: Methods of payment/Online Bill System

etc.—Denette F.

• Session 2: Tax law changes that may affect elderly

and/or disabled persons—Mary Y.

• 10 minute break
• Session 3: How tax values are established—Lisa F.
• Session 4: How to appeal a value; laws regarding

refunds and/or release of a tax bill—Dwane B.

• Session 5: Frequently asked questions—Dwane B.
• Questions from the audience

Distribution List…

• Send email to receive periodic updates

regarding website changes, tax law changes, revaluation information, etc.

dbrinson@leecountync.gov

Session 1

Methods of Payment, Online Bill System, etc.

Methods of Payment

• A taxpayer may use any of the following

mediums for in-person payment of property taxes:

– Cash – Personal check – Certified check – Money order

Methods of Payment Cont’d

• We also offer other mediums of payment via the

internet and telephone:

– E-check (online) – Credit card (online and telephone)

• For more information on internet and telephone

payments, visit www.leecountync.gov

Riding the Wave of Technology

• Future possible options:

– Allow taxpayers to pay in person via credit/debit card – Pay live on line through website

Due Dates

• Due dates/dates of delinquency

– Real property/personal property: Due September 1 Delinquent January 6 – Registered motor vehicles: Due the fourth month following initial registration

• r renewal. Delinquent the fifth month. Blocked the

eighth month.

2008 Collection Rate

• Overall
• 97%
• Real/Personal
• 98%
• Motor Vehicle
• 86%

Our Greatest Challenge!

• Motor Vehicles

Although motor vehicles have been billed by the same method since 1993, many individuals still do not understand that a motor vehicle bill is due within 30 days of the due date.

How are your tax dollars spent?

Enforced Collection

• Once a bill is delinquent, it is subject to

enforced collection measures

• To stop enforced collection, the bill must be

paid in full

Enforced Collection

• Garnishments
• Bank attachments
• Rent garnishments
• Levies
• Debt Setoff
• Foreclosures

Online Bill Inquiry System

• The Online Bill Inquiry System was

implemented to provide a convenience

• One can search most current and prior years’ tax

bills

• One can see when and if a tax has been paid

Although the ability to access Lee County tax bill information is

• btained through the Lee County

website, the information is provided through the County tax software provider. The information provided is limited to the current software capability.

Let’s begin our stroll!

Real Estate Inquiry

• Options to inquiry on real estate are:

– Property Address

• House number and street name—do not enter type
• ex. Rd, St, Ln

– Owners Name

• Property will be listed by first name on deed

– Parcel Identification Number

• Do not enter spaces or dashes

(NoT cAsE SeNsiTiVe)

Personal Property

• Options to inquire on personal property are:

– Property Address

• House number and street name—do not enter type ex. Rd,

St, Ln

– Owners Name

• Enter all or part of the owner’s name using the format Last,

First if applicable. If business listing enter the name of the business.

– Property Code

• This is the Property ID/PPID listed on your bill. No

dashes/spaces

(currently only current year bill information is available

• n line)

Motor Vehicle

• It is necessary that the information be

entered exactly as it appears on your Motor Vehicle bill.

• Owners name and plate number are both

required.

• Owner’s Name – Last, first, middle
• Bill Year – This is the specific year you are

inquiring.

Conclusion of Session 1

Questions?

Session 2: Tax Law Changes

• Property Tax Homestead Exclusion

105-277.1

• Property Tax Homestead Circuit Breaker

105-277.1B

Property Tax Relief for the Elderly & Permanently Disabled (Homestead)

• Who is eligible for this exclusion?
• If you are age 65 years or older or totally and

permanently disabled you may qualify for this exclusion.

• For tax year 2009 the income eligibility limit will be

$25,600.

• You must be a North Carolina Resident and the

property must be your primary residence.

Definition of Disabled

• A person is totally and permanently disabled if

the person has a physical or mental impairment that substantially precludes him or her from

• btaining gainful employment and appears

reasonably certain to continue without substantial improvement throughout his of her life.

• Documentation is required

Definition of Income

• All monies received from every source other than

gifts or inheritances received from a spouse, lineal ancestor, or lineal descendant.

• For married applicants residing with their spouses,

the income of both spouses must be included, whether or not the property is in both names.

• Social Security benefits DO count.

Other types of income

• Interest earned on bank accounts and

investments

• IRA distributions
• Capital gains
• Retirement benefits
• Dividends
• Wages

If I think I qualify, what should I do?

• Obtain an application from the tax office or
• nline at www.leecountync.gov
• Complete the application in its entirety
• Provide proof of income for verification
• Submit the application on or before the deadline
• f June 1.

What can be used as proof of income?

• If you file an income tax return you MUST

provide a copy to the tax office.

• Social Security Form SSA-1099
• Any other 1099 forms you receive
• W2 forms
• Any other documentation of income

How much is the exclusion? Effective for 2009

• The amount of the exclusion is one half the

value of the total property value OR $25,000; whichever is GREATER.

• For example if your property is valued at

$120,000, then your exemption would be ½ or $60,000.

• Your taxable value would be $60,000.

Continued

• If your mobile home is valued at $12,000 and

your home site is valued at $15,000. Your total value is $27,000. ½ would be only $13,500.

• Your exemption would be for $25,000.
• Your taxable value would be $2,000.
• Any fees such as Solid waste fees are not

excluded.

Circuit Breaker

• Same definition as 105-277.1

Property Tax Relief

• A taxpayer who qualifies for both types of

property tax relief may elect only one type of relief, the exclusion or the circuit breaker.

• If property is owned by two or more persons all

must qualify for both types of relief and all must elect the circuit breaker for it to be allowed instead of the exclusion.

Continued

• Application deadline is June 1st
• Qualifying owner

– Must be a North Carolina resident – 65 years of age or totally & permanently disabled – Occupied property as permanent residence for 5 years or more

Income Eligibility Limit

• No more than 150% of the exclusion income

limit.

• For 2009, the exclusion limit will be $25,600 so

the circuit breaker income limit will be $38,400. 25,600 x 150% = 38,400

Deferred Amounts

• May defer a portion of tax on the residence
• Taxes that exceed 4% of income if income is less than

homestead exclusion ($25,600)

• Taxes that exceed 5% of income if income is equal to
• r greater than homestead exclusion but less than

150% of homestead exclusion limit ($38,400)

18,000 4.00% $720 20,000 4.00% $800 22,000 4.00% $880 24,000 4.00% $960

Income/Taxes

26,000 5.00% $1300 30,000 5.00% $1500 32,000 5.00% $1600 37,500 5.00% $1875

Circuit Breaker Cont.

• The maximum amount of taxes owed is the total
• f all taxes:

– County – Municipalities – Special districts – Does not include fees

For example

• If a taxpayer’s income is $30,000 the maximum

amount of taxes they would pay would be $1,500. $30,000 x 5.00% = $1,500.

• If the taxpayer’s taxes were actually $2,500, then

the amount of deferred taxes would be $1,000. $2,500 - $1,500 = $1,000.

What’s the catch?

• Unlike 105-277.1, the new circuit breaker, 105-

277.1B is not an exclusion of taxes but a deferment of taxes…

• Therefore, 3 previous years of deferred taxes

and interest are a lien on the property.

• Deferred taxes become due upon a

disqualifying event.

Disqualifying Events

Death

1. Unless the owner’s share passes to either a spouse

• r co-owner, and

2. That individual occupies the residence, and 3. That individual elects to continue deferring the taxes.

Continued

Transfer of Property

1. The owners transfers property to either a co-

• wner or to a spouse as part of a divorce

proceeding, and 2. That individual occupies the residence, and 3. That individual elects to continue deferring the taxes.

No longer the permanent residence

Other things to know

• All or part of the deferred taxes and accrued

interest may be paid at any time.

• Any partial payment is applied first to the

accrued interest.

• Taxpayer may remove himself/herself from the

program in writing.

• The tax collector must notify the property
• wner by Sept. 1 of each year of the amount of

deferred taxes and interest.

QUICK COMPARISON

Age 65 or disabled Age 65 or disabled Permanent residence Permanent residence for minimum of 5 years Income at or below $25,600 for 2009 Income at or below $38,400 for 2009 No re-payment of excluded taxes Re-payment for 3 years of deferred taxes plus interest Exclusion is the greater of 50% of value or $25,000 Deferment amount will vary depending on income and taxes Homestead Circuit Breaker

Need help?

Our staff will be available to assist the public and provide information about the two types of

• relief. We cannot make a decision for you or

advise you which option to take. If you currently receive the homestead exclusion and do nothing, you will still receive the homestead exclusion under 105-277.1.

Conclusion of Session 2

Questions?

10-Minute Intermission

Session 3:

How Tax Values are Established

Single-Property Appraisal versus Mass Appraisal

• A single–property appraiser works on one property at a

time

• The mass appraiser is charged with appraising all

properties in the county at one time.

• The report produced by a single-property appraiser is

judged by the client based on completeness, thoroughness and reasonableness. The result of a mass appraisal for property tax purposes is the distribution of the property tax burden.

Continued

• The single-property appraiser is focused on one

property and all its amenities.

• The focus of the mass appraiser is on achieving

fairness and equity between and among parcels in a large group.

Let’s talk about Revaluation: What is it?

• Revaluation is a process of appraising all real property for

taxation purposes at 100% market value.

• The next revaluation will become effective January 1, 2011.
• NCGS 105-286 requires that each county in North Carolina to

conduct a general revaluation of real property at least every eight years.

• NCGS 105-286(a)(2) allows a local Board of County

Commissioners to conduct revaluations more frequently. – Prior to 2007, Lee County’s last reappraisal was in 2003. We are currently on a 4-year cycle. – More frequent revaluations greatly reduce shifts within the tax base and “sticker shock”.

Purpose of Revaluation

• The primary purpose of a revaluation is to equalize the

tax base by valuing all properties using the same set of standards and methods of comparison.

How often is property revalued?

• In Lee County, real property is revalued every

four years.

• Personal property, motor vehicles and public

service property are revalued annually.

• North Carolina requires the use of the same tax

rate for all types of property.

• With real property values “frozen” the tax

burden typically shifts toward personal property between revaluations.

Key Steps In The Revaluation Process

• Neighborhood Delineation: Establish

Neighborhoods of like properties throughout the

• County. We currently have 210 Neighborhoods.
• Qualify/Disqualify Sales: Review all sales to qualify

the good and disqualify the bad.

• Land Pricing: Review sales of vacant properties to

establish base land models and rates.

• Cost Study: Collect cost data for labor and materials

and review sales of vacant versus improved properties within the same neighborhood to help establish improvement value.

Key Steps Continued

• Value Reviews/ Editing: Review the newly assigned

value of each property to check for accuracy and identify any potential errors.

• Public Relations: Meet with community civic groups

and other organizations to educate the on the revaluation and what to expect.

• Notification: Mail new value notices to the owners.
• Appeals Process: Informal, Board of Equalization &

Review and Property Tax Commission.

• Billing: Mailing of tax bills.

Approaches to Determining Values

• There are three basic appraisal approaches used

in determining real value.

– Cost: What is the cost of materials, supplies and labor in producing the improvement? – Income: What is the income potential of a given property if used commercially? A capitalization rate is applied to the net yearly income for this approach. – Market: What are similar properties selling for on the open market?

What affects land value?

• There are numerous influence factors that can

have an impact on land value. In analyzing sales, we try to identify the reasons for variations in sales prices of properties within a given neighborhood and make allowances for them.

What affects land value? Cont’d

Some of the major influence factors that affect value are: Location Topography Zoning Size Water / Sewer Shape View Percolation Access Easements

Determining Land Value

• Since sales are the best indicator of value for

land, we give considerable weight to the market approach.

• Once neighborhoods have been established

throughout the county, sales will be analyzed within each neighborhood.

• Land can be valued as acreage, gross lot, square

footage or by the front foot.

Land Sales Example

• If three lots sell on main street for $15,000, then

the value of the main street lots may be $15,000.

• If Lot 1 sells for $10,000; Lot 2 sells for $11,000;

Lot 3 sells for $11,500; then the value of lots may be somewhere between $10,000 and $11,500. Our job will be determining the reason for the variation in sale price which could be any

• ne or a combination of the influence factors

listed previously.

Improvements

• Improvements could be any of the following:

Houses Offices Apartments Pools Condominiums Storage Buildings Barns Chicken Houses Garages Etc.

What affects improvement value?

• Any or all of the following can have an affect on

improvement value: Size Age Quality of Construction Condition Materials Used Amenities Desirability Location Adaptability Usefulness of Improvement Potential Income Replacement Cost

Determining Improvement Value

The cost approach is the best way to determine the value of new improvements while the market, income and cost approach are all used to value older improvements. Replacement cost new less depreciation (RCNLD) is obtained through research and analysis of:

• Cost of contract labor
• Cost of construction materials and supplies for new

structures

• Indirect cost such as permits and fees
• Sales of Property that originally sold as vacant and later

sold as improved

• Sales of improved properties with similar construction
• f various ages

What value will the revaluation produce?

• There are three values that we are interested in

as a result of the 2011 revaluation.

1. Market Value 2. Assessed Value 3. Taxable Value

Remember Market Value

• NCGS 105-283 “The price estimated in terms of

money at which the property would change hands between a willing and financially able buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of all the uses to which the property is adapted and for which it is capable of being used”.

What is Assessed value?

• The assessed value of any given property should

resemble the market value of that property as of January 1st in the year of the last revaluation

• The assessed value of a given property remains

constant from one revaluation to the next unless mapping changes occur, improvements are added or removed, or a change in value is warranted by NCGS 105 - 287.

Cont’d

• When improvements are added in a non

revaluation year, they are valued using the same rates and standards as all other properties in the

• county. Example: House is built in 2009. Tax

value will be based on the schedule of values that were established in 2007. This way everyone is treated equally and all values are adjusted according to the three approaches in the next revaluation.

What is Taxable Value?

• The assessed value and taxable value are the

same unless the property is in the land use value program or has qualified for an exemption or exclusion as allowed by statutes.

• The taxable value is used in conjunction with the

tax rates to calculate the tax bill.

Conclusion of Session 3

Questions?

Session 4

How to appeal a value, etc.

Session 4: Value appeals and corresponding laws

• NCGS 105 – 287: Changing value in a non-

revaluation year

• Change of value notices
• Can meet with a tax appraiser to discuss value

Session 4: Refunds

• NCGS 105 – 381: Refund of a tax
• Ammons v. Wake County

Conclusion of Session 4

Questions?

Last session coming up…!

Session 5: FAQs

• Why did my value increase so much in just one

year?

• When will levying upon personal property
• ccur?
• Does the county tax office foreclose upon

properties for past due taxes?

Conclusion of session 5

Questions?

Thanks for coming!!!