Most North Carolina businesses will receive their property tax bill in July or August. So, having just received your property tax bill, what should you take a closer look at?
What You Need to Know about Property Tax in North Carolina
Real Property: All real estate, except properties under exemptions and exclusions by statute, is subject to the property tax. This includes real estate owned for business purposes such as apartments, office buildings, retail properties, and industrial facilities. Taxable real estate also includes “personal use” real estate, typically primary or secondary residential properties.
Business Personal Property: In addition to real estate, personal property used for business purposes is taxable for property tax purposes. This includes the contents of office properties [furniture and equipment, computers], the non-real estate contents of retail facilities [shelves, signage, POS systems], and the machinery and equipment found in industrial properties. Motor vehicles, both personal and business, are subject to the property tax, but are handled through a different system.
Decoding Your Property Tax Bill
The tax you pay is composed of 2 factors: (1) the tax rate and (2) the tax value of the property being taxed. The tax rate is multiplied by the tax value of the property to determine the tax owed. So, lowering the tax rate or the tax value of the property, or both, will result in a lower property tax bill.
Can You Appeal the Tax Rate?
By the time you receive your tax bill, you have no remedies for appealing the tax rate because the tax rate is already set and there is no provision for appealing it. Since the tax rate is essentially part of the political process, i.e., set by the city councils and county commissioners when they adopt a budget, the only real remedy you have to appeal the tax rate at any time is to  appear at the budget hearings of the city council/county commissioners and advocate for a lower tax rate or  work to elect representatives for the city council/county commissioners who you think will favor lower tax rates.
Can you Appeal Your Property Values?
While there isn’t much you can do retroactively about the tax rate, there are remedies for the appeal of the values assigned to your real and business personal property for tax purposes.
Appealing the Value of Your Real Property
Unfortunately, by the time you get your tax bill, the time for filing an appeal of your real estate values will have passed. Real property is required to be valued at fair market value as of January 1 of a specific year, called the “revaluation year.” Localities in North Carolina are required to revalue real property at least every 8 years, although some do it more frequently, usually on a 4-year cycle. Once the value is set in the revaluation year, it generally does not change for property tax purposes until the next revaluation.
A taxpayer can appeal the assessed real estate value in any year by filing an appeal with the local board of equalization and review [“BER”]. The appeal deadline varies from county to county and from year to year, but is always during the second quarter of the year. Failure to file an appeal before this deadline means the company has lost the ability to challenge the tax value of its property for that year.
The owner can always file an appeal next year, pending meeting the filing deadline, but any relief will only apply for that year and perhaps future years. There is no retrospective relief. By the time that tax bills come out in July or August, the appeal deadline for challenging the tax value of real estate has already passed for the current year. The only remedy is to appeal in the following calendar year.
Appealing the Value of Your Business Personal Property: It’s Not Too Late!
With respect to business personal property, however, the case is different. Business personal property is essentially “revalued” every year. The owner of business personal property files a “listing” of its business personal property every year in January showing the year’s purchases and the original cost of the business personal property by certain categories.
The tax assessor then runs these numbers through certain trending/depreciation tables to determine the assessed value of the property as of January 1 of that year. However, the tax assessor doesn’t immediately notify the owner of the values being assigned to the owner’s business personal property. Instead, the first notification the company receives with the assessed value of business personal property for property tax purposes is its tax bill. Since this is the first notice of value to the taxpayer, the taxpayer has 30 days from the date on the bill to file an appeal to challenge the value of the business personal property. Failure to file an appeal within the 30-day deadline means the taxpayer has lost the right to appeal for that tax year.
Reviewing Your Property Tax Bill
What should you do when you receive your property tax bill?
First, look to see the value assigned to any real estate. If you think it exceeds the fair market value of the property as of the last revaluation date, then set a calendar reminder to file an appeal with the local BER in the first quarter of the next calendar year.
Second, look to see the value assigned to any business personal property. If you think it exceeds the fair market value of the property as of January 1 of the current year, then file an appeal within 30 days of the date on the tax bill.
While it’s worthwhile for all companies to review their business personal property bill, businesses in certain sectors — such as in manufacturing and industrial — will want to pay close attention as there may be expensive equipment that is no longer in service or that has quickly depreciated in value.
If you file an appeal, legal assistance can help prosecute your property tax appeal.
About the Author:
John A. Cocklereece is an attorney with Bell, Davis & Pitt, P.A., with offices in Winston-Salem and Charlotte. Property tax appeals is one of his areas of practice. He can be reached at [email protected] or 336-714-4123.