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North Carolina

For the complete text of North Carolina statutes please refer to the North Carolina General Assembly. For additional property tax information please refer to the North Carolina Department of Revenue.

Property Classification:

Certain forestland and open-space land is designated as a special class of property under the authority of the North Carolina Constitution and, as such, is excluded from taxation or is otherwise specially treated.

Forestland consisting of at least one tract having a minimum of 20 acres in actual production and that is not included in a farm unit is designated a special class of property eligible for taxation based upon its present-use value if it meets certain ownership requirements.

Forestland - Land that is a part of a forest unit that is actively engaged in the commercial growing of trees under a sound management program. Forestland includes wasteland that is a part of the forest unit, but the wasteland included in the unit shall be appraised under the use-value schedules as wasteland. A forest unit may consist of more than one tract of forestland, but at least one of the tracts must meet the ownership requirements below, and each tract must be under a sound management program. Woodland that is a part of a farm unit is considered to be agricultural land; however, such lands are to be appraised under the use-value schedules as woodland (Sec. 105-277.3, G.S.; Sec. 105-277.4, G.S.)

Present-use value - means the value of land it its current use as forestland, based solely on its ability to produce income, using a rate of 9% to capitalize the expected net income of the property and assuming an average level of management.

Ownership Requirements: To qualify for forestland classification, property owned by natural persons must:

1. be the owner's place of residence.

2. must have been owned by the current owner or a relative of the current owner for the four years preceding January 1 of the year for which the benefit of this section is claimed.

3. At the time of transfer to the current owner, it qualified for classification in the hands of a business entity or trust that transferred the land to the current owner who was a member of the business entity or a beneficiary of the trust, as appropriate.

4. The land must, if owned by a business entity or trust, have been owned by the business entity or trust or by one or more of its members or creators, respectively, for the four years immediately preceding January 1 of the year for which the benefit of this section is claimed

Land owned by general or limited partnerships, limited liability companies, or corporations will be assessed at its present-use value if the entity's principal business is forestry, and all the members of the entity are either individuals actively engaged in that business, or are relatives of individuals who are actively engaged in that business.

Effective for North Carolina property taxes imposed for taxable years beginning after June 2004, agricultural land, horticultural land, and forestland owned by a business entity may retain its present-use value status when the land is leased to a nonmember provided all members of the business entity are relatives. (Sec. 105-277.2(4)(b), G.S.)

Land owned by trusts will be assessed at its present-use value if:

1. the trust was created by an individual;

2. the land qualified for present-use valuation in the hands of that individual; and

3. all of the current beneficiaries are either the trust's creator or relatives of the trust's creator, or a second trust whose current beneficiaries are the trust's creator or relatives of the trust's creator.

In addition, land owned by testamentary trusts will qualify for present-use valuation if the trust was created by an individual, the land qualified for present-use valuation in the hands of that individual, the creator of the trust had no relatives at the time of death, and the trust income is used for educational, scientific, literary, cultural, charitable, or religious purposes.

Land enrolled in the federal Conservation Reserve Program shall be assessed as agricultural land if it is planted in vegetation other than trees, or as forestland if it is planted in trees.

Application: To obtain present-use valuation, an application must be filed with the assessor of the county in which the property is located during the regular listing period of the year for which the benefit of this classification is first claimed or within 30 days of the date shown on a notice of a change in valuation A new application does not have to be submitted unless the property is transferred or becomes ineligible for present-use-value appraisal because of a change in use or acreage.

Change in use - The difference between the tax based on a present-use valuation and the amount that would otherwise be due, together with any accrued interest, penalties or costs, is carried as a lien on the property as deferred tax. When the property, or any part of it, no longer qualifies for forestland classification, the applicable deferred taxes for the preceding three fiscal years, plus interest, are payable immediately.

Exemption - Standing timber, pulpwood, seedlings, saplings, and other forest growth is classified as a special class of property under the authority of the North Carolina Constitution and, as such, is excluded from taxation (Sec. 105-275(15), G.S.). The purpose of this classification is to encourage proper forest management practices and to develop and maintain North Carolina's forest resources.

Valuation and Assessment:

North Carolina has 6 Major Land Resource Areas (MLRA's) which are characterized by particular patterns of soils, relief climate, water resource, and land use. It is from these MLRA's that the basis for net income schedules are derived. Each schedule contains 5 net income ranges listed by decreasing income levels. A 100% assessment is applied to these values.

Severance Tax:(Sec. 113A-194)