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thomas.goldsmith@newsobserver.com or (919) 829-8929
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EXEMPTION HELPS SOME STAY IN THEIR HOMES
North Carolina's homestead exemption, passed in 1972, is designed to allow people over 65 and totally disabled people to stay in their homes when increased values might otherwise push their taxes out of reach.
This year, legislators raised the income level at which households qualify for the break from $20,500 to $25,000, to take effect in the 2008 tax year.
The provision can get complicated, but it basically allows eligible homeowners to pay lower taxes. For example, someone with a home worth less than $25,000 would pay no tax.
If the home's value is more than $50,000, the owner would pay taxes on only half the value of the house. A $100,000 house, then, would be taxed for only $50,000 -- half its value.
In 2009, another method of lowering taxes will take effect. It will allow homeowners to put off paying part of their property taxes if the tax bill exceeds a certain percentage of their income. The provision involves the government's taking a lien on the homeowner's property to make sure the deferred tax gets paid if the home is sold or inherited.
FOR MORE INFORMATION
More information is available at county tax offices:
* www.wakegov.com/tax/default.htm
* www.durhamcountync.gov/index.html
* www.co.orange.nc.us/revenue/
Other resources:
NORTH CAROLINA HOUSING COALITION
Online: www.nchousing.org
Phone: 881-0707
AARP
Online: www.aarp.org
Phone: (866) 389-5650
TAX OPTIONS FOR OLDER PEOPLE
In addition to the homestead exemption law, there are other options for older people faced with high taxes on valuable homes:
APPEAL: Homeowners who received reappraisals this year can appeal their valuations. Use the form attached to your notice of assessment and be sure to include support such as documents, recent appraisals, photos, market studies, etc.
MORTGAGE: Some older owners can take out reverse mortgages. These are loans, taken out against the value of a home, that do not have to be repaid until the the last living owner dies, sells the home, or permanently moves out. They are repaid in full out of the home's value when the last owner dies.
As with any contract, a reverse mortgage should be thoroughly vetted before signing. In addition, the owner will still have to pay property taxes.
DONATE: A donation of property to a nonprofit or government may allow a homeowner to remain on the property tax-free, under the condition that the property will go to the agency or government when the owner dies or moves away.
SOURCES: AARP, WAKE COUNTY GOVERNMENT, NORTH CAROLINA HOUSING COALITION, NATURAL LANDS TRUST
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There may be some relief next year when the county commissioners set the actual tax rate. But even if the rate declines, the Taylors expect their tax bill to go up more than $1,000."Even if the rate goes down, the total amount of taxes goes up because they assessed it so high," Wayne Taylor said.Added Mary: "It would be a hardship."Pain in Five PointsAllen Taylor, 64 -- no relation to the Cameron Park Taylors -- bought his 1,328-square-foot house in Five Points in 1975 for $21,900. That's $85,000 in today's dollars.Because Wake County says the house is now worth $394,000 -- nearly $300 per square foot -- Allen Taylor worries that he and his wife may have to sell sooner rather than later."We are eventually, through the tax situation, going to be run out of our property," he said.With his wife a few years from retirement at Rex Healthcare, Allen Taylor says the likely rise in property taxes could put the couple in a deep hole. They'd be hard pressed to make the improvements that would help their house sell at top price to finance their retirement."We are not in the position to fight City Hall, on one side, or do a lot of the stuff that has to be done, on the other," Taylor said.Allen and Andrea Taylor's house has problems, including a bathroom so small that "you'd fall in there and never hit the floor," he said.However, in red-hot neighborhoods such as Five Points or Durham's Trinity Park-- where assessments went up an average of 63 percent -- it's common for values to have doubled, as the Allen Taylors' did, since the last round."We are going to be pretty hard hit by this," Allen Taylor said. "Our house has been perfect for two people without children."Both Wayne Taylor and Allen Taylor contested the values assigned to their homes the last time around but weren't successful. Neither will try again."I don't mind paying taxes, but I don't like for it to be disguised this way," Wayne Taylor said, maintaining that the county is overvaluing property to bring in more revenue.Mary Taylor doesn't think their house would bring the value attached to it by Wake County. Two smaller houses on their street sold for $637,500 and $801,500 during the past 18 months."In the next assessment, if it's too high, we'd have to think about moving away," Mary Taylor said. "We've lived here and raised our four children here. We'd like to be able to leave it, God willing, to our children."
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