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THE CIRCUIT BREAKER HOMESTEAD TAX DEFERMENT PROGRAM
Q: What is the Circuit Breaker Homestead Tax Deferment
Program?
A. The Circuit Breaker Tax Deferment
program limits the amount of taxes qualified North
Carolinians, who are age 65 and over or totally and
permanently disabled, must pay on their permanent
residence (homestead). Taxes are limited to a percentage
of their income.
Taxes above that percentage are deferred until there is
a disqualifying event that triggers the repayment of the
deferred taxes.
Tax Limitations for 2010
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Income =
$0 to $27,100*
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Taxes are limited to 4% of annual income.
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Income =
$27,101 to $40,650
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Taxes are limited to 5%
of annual income.
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Income =
Over $40,650
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Does not qualify.
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*Homeowners with incomes of $27,100 & less; that are
over age 65 or are totally and permanently disabled
should consider the ELDERLY OR DISABLED HOMESTEAD
EXCLUSION. The exclusion may provide more tax
relief than the Circuit Breaker Tax Deferment Program.
Homeowner’s cannot be granted both types of property
relief.
Q: What are the qualifications for the Circuit Breaker
Tax Deferment Program?
A: You may be
qualified for the Circuit Breaker Homestead Tax
Deferment Program if:
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YOU ARE a Bertie County Resident at least 65
years of age on January 1st of the tax year in which
you wish to claim the exemption; AND
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YOU AND YOUR SPOUSE'S income did not exceed
$40,650 for the year prior to which an application
is made; AND
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YOU HAVE owned and occupied you current
permanent legal residence for 5 or more years;
OR
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YOU ARE certified totally and permanently
disabled by a licensed physician or governmental
agency; AND
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YOU AND YOUR SPOUSE'S income did not exceed
$40,650 for the year prior to which an application
is made; AND
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YOU
HAVE owned and occupied you current permanent legal
residence for 5 or more years;
If the property is owned by MULTIPLE OWNERS (other than
husband and wife) every owner must meet the
qualifications above.
Q: How are deferred taxes calculated and are they lien
on my property?
A. Deferred
taxes are the amount of taxes on one’s
Homestead/Permanent Residence over and above the
limitation (either 4% or 5% of one’s income) granted by
the program. Unlike some other tax relief programs,
deferred taxes are a lien on the property. The Tax
Department keeps a record of the deferred taxes until a
disqualifying event triggers the repayment of the
deferred taxes.
Q: What would trigger the repayment of the deferred
taxes?
A. A
disqualifying event would be:
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Death of the owner.
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Transfer of the property.
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Owner ceases to use the property as a permanent
residence.
Q: What happens if I apply and qualify for the Circuit
Breaker Deferred Tax Program for one or more years and
in the future I no longer qualify or I fail to submit
the required annual application?
A. Until a disqualification event occurs, the deferred
taxes will not become due. Since incomes can vary from
year to year it is possible that you may qualify one
year, but not the next, and then re-qualify in a
subsequent year.
Q: Do “ALL” deferred taxes have to be repaid?
A. The last
three years of deferred taxes prior to a disqualifying
event and any deferred taxes for the year of and
subsequent to the disqualifying event must be repaid.
Q: Does “INTEREST” also have to be paid on deferred
taxes when they become due?
A. Yes,
Interest does have to be repaid on deferred taxes. The
amount if interest is calculated from the date the taxes
would have originally become due.
Q: What is considered “INCOME” and how much can I make
and still qualify for the circuit Breaker Tax Deferment
Program?
A. Income is
defined as all other moneys received from every source
other than gifts or inheritances from family members.
Income does include money received from social
security, disability, retirement and rental income. For
the year 2010, the income limit is $40,650. This
threshold is adjusted annually for cost-of-living.
Q: What is considered part of my Homestead/Permanent
Residence?
A. It
includes your dwelling, the dwelling site (not to exceed
1 acre), and related improvements such as a garage,
carport or storage building. The dwelling may be a
single- family residence, a unit in a multi-family
complex, or a manufactured home. The tax on additional
land and buildings, not part of the homestead/permanent
residence, is not subject to any limitation.
Q: Do I have to apply in person?
A. For this
exemption, the qualifying homeowner may submit an
application
by mail, fax, or in person at the Tax Department. Since
this program is based in your annual income you must
file a new application each year.
Q: How can I show that I am 100% totally and permanently
disabled?
A. You must
furnish a certification that you are totally and
permanently disabled from either a licensed physician (Physician
Certification of Disability)
or from a government agency such as the Social Security
Administration. The agency must have the proper
authority to determine qualifications for disability
benefits. If you or your spouse is over 65 years old,
you do not need to submit a certification of disability.
Q: How do I provide proof of income?
A. If you are
required to file a Federal Income Tax return you must
provide a copy of the first page of the return. For non
income tax filers, other proof of income is required.
(See Application for details) Proof of income must
reflect income for the year immediately preceding the
tax year for which an application is made. (For example,
if an application is submitted for 2010, income for 2009
must be reported.)
Q: When is the deadline to file an
application?
A.
Applications are timely filed if received by June 1st of
the year for which the exemption is applied.
Q: Do I need to reapply annually?
A. Yes. An
annual application is required.
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