NC Homestead Exemption: What New Homeowners Need to Know

One of the least talked about benefits of owning a home in North Carolina is the property tax relief available to qualifying homeowners through the state's homestead exemption program. Most new buyers have never heard of it, and many long-term homeowners who qualify are not taking advantage of it. Here is what it is, who qualifies, and how to apply.

What the NC Homestead Exemption Is

North Carolina's homestead exemption is a property tax relief program for elderly and disabled homeowners. It is not a blanket discount for all homeowners. It is specifically designed to help older and disabled residents on fixed incomes manage the cost of property taxes on their primary residence.

The program excludes the greater of $25,000 or 50% of the appraised value of the home from property taxation. That means if your home is appraised at $300,000, you would only be taxed on $150,000 of that value rather than the full amount. The savings are meaningful and compound year over year.

Who Qualifies

To qualify for the NC homestead exemption you must meet all of the following criteria:

• You must be at least 65 years old, or totally and permanently disabled regardless of age.
• You must be a permanent resident of North Carolina.
• The property must be your permanent primary residence.
• Your income must not exceed $36,700 per year (this limit adjusts periodically, so verify the current figure with your county assessor).
• The income limit applies to the total income of both the applicant and their spouse.

Surviving spouses of individuals who previously held the exemption may also qualify in certain circumstances. Check with your county directly if this applies to your situation.

What Counts as Income

Income for purposes of this program includes Social Security, retirement income, pension payments, investment income, rental income, and most other sources. It does not include certain medical expense reimbursements or some government assistance payments. If your income is close to the threshold, it is worth applying and letting the county assessor make the determination rather than assuming you do not qualify.

How to Apply

Applications are filed with the county tax assessor's office in the county where the property is located. In Wake County, that is the Wake County Revenue Department. In Durham County, that is the Durham County Tax Administration office.

The application deadline in North Carolina is June 1 of the tax year for which you are applying. You apply once and the exemption renews automatically as long as you continue to qualify, though you are required to notify the county if your circumstances change in a way that affects eligibility.

You will need to provide proof of age or disability, proof of residency, and documentation of your income. Most county assessor offices have the application available on their website or you can pick one up in person.

The Circuit Breaker Program

North Carolina also has a related program called the Circuit Breaker Tax Deferment Program, which is available to homeowners who are 65 or older or totally and permanently disabled and whose income does not exceed $55,050 per year. This program limits the property tax you pay to a percentage of your income (4% for income up to $36,700 and 5% for income between $36,700 and $55,050) and defers the remaining tax as a lien on the property until the home is sold or ownership changes.

The Circuit Breaker is a good option for homeowners who own a higher-value home and have limited income, since the deferred taxes are only due when the home eventually sells.

For Buyers Under 65

If you are a new homeowner and do not qualify for the homestead exemption right now, file this away for the future. This is not a benefit you want to forget about when you hit the eligibility threshold. Set a reminder for when you turn 65 and check the income limits at that time.

Also worth noting: some counties in North Carolina offer additional local property tax relief programs beyond the state homestead exemption. Wake County and Durham County both have their own assistance programs worth checking if you or a family member may qualify.