Don't stop at the top of the ballot Orange County.

It is your choice whether or not to participate in this ballot issue. The vast majority of Orange County governmental matters decided by vote are determined by the elected members of the Board of Commissioners. What Orange County voters decide will directly affect whether the land transfer tax will go into effect. The state law authorizing the land transfer tax says that voters in a county must approve it before a Board of Commissioners can put it in place.

It is a tax on a percentage of the value of the sale of real property, including undeveloped land, houses, office buildings, and other commercial buildings.

Each time a property is sold, the seller is responsible for payment of the tax. This tax will work in basically the same manner as the current excise tax on real property transactions.

The tax is paid as part of the closing of the sale, when the deed is recorded.

The tax is calculated by multiplying 0.4% by the sale price of the real property. For example, if an owner sells a house and lot for $250,000 (the 2007 Orange County median), he/she would be responsible for paying a $1,000 land transfer tax at closing on the property sale.

Yes. In some cases when property changes hands, such as through gift or inheritance, no tax would be due. For more information on land transfer tax exemptions, click on this link to read an excerpt from Chapter 105 of the North Carolina General Statutes.

The last item on the ballot contains a question that reads:
COUNTY LAND TRANSFER TAX
Real property transfer tax at the rate of up to four-tenths percent (0.4%) of value or consideration.
( ) FOR ( ) AGAINST
To view what a May 6 ballot will look like, click here. There are different versions of the Orange County ballot, depending on where a voter lives. Click on this link to the Orange County Board of Elections for more ballot information.

County staff estimates that if the land transfer tax is approved by voters and implemented by the Board of Commissioners to start on July 1, 2008, the tax would generate about $3.5 million for the 2008-09 fiscal year.

The law does not limit how the proceeds of a transfer tax are used. The Board of Commissioners adopted a resolution indicating plans to spend the proceeds to pay for building and improving schools and parks.
To read the Board's March 18, 2008 resolution, click on this link.

North Carolina law requires all county registers of deeds to collect a tax from everyone who sells real property, unless the transaction is exempted under the General Statutes. This existing tax amounts to 0.2% of the value of any sale. Although this existing tax works the same way as a land transfer tax would work, State law refers to it as the "excise tax on conveyances". One-half of the excise tax revenue is sent to the State and the county that collects it retains one-half. The existing excise tax will remain in place regardless of whether or not Orange County voters approve and the Board of Commissioners implements a separate land transfer tax.
For more information on the existing State excise tax, click on this link to read an excerpt from Chapter 105 of the North Carolina General Statutes.

If Orange County voters approve it on May 6, the Board of Commissioners can implement it by resolution following 10 days public notice. If that takes place in May 2008, the land transfer tax would go into effect on July 1, 2008. If Orange County voters do not approve it on May 6, the land transfer tax will not go into effect.

The State legislature controls how counties can raise money to meet its citizens' needs. This tax, which functions just like the current 0.2% excise tax on real property transactions, was authorized and created by the North Carolina General Assembly during its 2007 Session.
To read an excerpt from Chapter 105 of the General Statutes that authorizes this local option county tax, click on this link.

The three largest revenue sources for the County's operating budget in the General Fund based on the adopted 2007-08 budget ordinance are property taxes, sales taxes, and intergovernmental revenue. Of the $173.6 million in budgeted General Fund revenue, 69.0 percent ($119.9 million) comes from property taxes; 12.0 percent ($20.8 million) comes from sales taxes; and 9.4 percent ($16.3 million) comes from intergovernmental sources such as State and federal grants.
Click here to review the County's adopted 2007-08 budget ordinance.

The same 2007 North Carolina law that authorized county boards of commissioners to conduct an advisory referendum for voters to decide whether or not to approve a land transfer tax also authorized counties to conduct a referendum on an additional one-quarter cent local option sales tax. Counties were given the authority to place either the land transfer tax question, the local option sales tax question, or both on a ballot for voters' approval, although only one tax or the other may be put into effect if voters approve both. The Orange County Board of Commissioners decided to ask the Orange County Board of Elections to place the land transfer tax question alone on the May 6, 2008 ballot.
Click on this link to review the February 19, 2008 resolution of the Orange County Board of Commissioners scheduling the May 6 land transfer tax referendum.

As noted in Orange County's 2005-2010 Economic Development Strategic Plan, part of the mission of the County's Economic Development Commission is to "encourage public-private investments to provide jobs for county residents and to increase the non-residential tax base". One of the established goals of the Plan is to create 5,000 new private sector jobs in Orange County and add $125,000,000 in new commercial property by June 2010.
To read more from the Orange County Economic Development Five-Year Strategic Plan: 2005-2010, click on this link.

Matters of federal and State income tax deductibility may be affected by each taxpayer's individual set of circumstances. Accordingly, each taxpayer should consult with his or her tax advisor. With regard to transfer taxes (or stamp taxes), Internal Revenue Service Publication 17 provides that "Transfer taxes and similar taxes and charges on the sale of a personal home are not deductible. If they are paid by the seller, they are expenses of the sale and reduce the amount realized on the sale. If paid by the buyer, they are included in the cost basis of the property."
To review a relevant excerpt from IRS Publication 17, click on this link.