Today’s round of questions, my smart-aleck replies and the real answers:
Question: I imagine that many of us who own short- or long-term rental properties just received their notices from our friendly county tax assessor regarding “personal property” itemizations in those units. We are supposed to list things like dishwashers, stoves, beds, linen, dishware, washing machines, etc., to be taxed as personal property (like our cars are taxed). So many questions … How is it justified that these items, for which we paid sales tax to begin with, and then which generate additional income for the rental WHICH IS TAXED AS INCOME (a rental with a dishwasher or furnishings rents more than one without)? How can a legitimate tax be levied on “estimations” of the original price paid or date of purchase, when you cannot be expected to remember that far back? What about stuff that existed on the property when you originally bought the place? Who knows what was paid and when? How many extra county staff will be required to process these thousands of itemizations, with vague and unverified data? And what will the tax assessments be? How will the county deal with depreciation? How does one plan for this? Will they do spot checks for enforcement? This whole thing is a mess, with inadequate notification, planning, or public comment. Does not speak well for our elected Tax Assessor.
My answer: If I’ve said it once, I’ve said it a thousand times — if you just don’t pay these taxes, you save a whole lot of time and money. Sure, you may spend some of that time you save in the big house, but overall you come out ahead. Maybe.
Real answer: Let’s start with the last comment first. The Tax Assessor is an appointed position in Buncombe County, not elected, according to county spokesperson Lillian Govus. Keith Miller is Buncombe County’s tax assessor.
Now, about the meat of this issue.
“We’ve gotten a lot of these questions and have provided some FAQs on our webpage here,” Govus said via email
Govus also said what could be really helpful for readers is this 2018 blog from Coates’ Cannon “that really breaks down the North Carolina general statute this action is based on.
“While this may feel new, and we are taking a new approach to helping property owners see their role in it, taxation on personal property used in conjunction with an income producing property or business is nothing new,” Govus said. “The North Carolina Property tax laws have always required property owners to report personal property they provide in a rental.”
Govus said some property owners may not have realized this, but it is a reporting requirement, and many property owners have been in compliance with statutes before receiving the recent reminder from the county.
“The form that was mailed to potential property owners was a new effort to help raise awareness with property owners of their obligation under the current North Carolina general statutes,” Govus said. “Our office advertises the listing period every year, and this year we have also sent notices to all owners who may have unlisted business personal property to make sure that we have the most accurate data on all Buncombe County properties.”
Govus provided answers to each of the reader’s questions. We’ll go point by point.
How can a legitimate tax be levied on “estimations” of the original price paid or date of purchase, when you cannot be expected to remember that far back?
“Appraisal methodology used for this type property is cost minus depreciation,” Govus said. “If the owner can provide the original cost and date, we can estimate a value using the current depreciation schedules. If the owner does not know the original purchase date and cost, we will work with the owner to establish a value.”
What about stuff that existed on the property when you originally bought the place?
“A value of the property still needs to be established regardless of how the property was acquired,” Govus said. “Our office can work with property owners to develop estimations.”
How many extra county staff will be required to process these thousands of itemizations, with vague and unverified data?
“Current county staff will be used to process the data,” Govus said.
And what will the tax assessments be?
“Property value assessments will reflect the estimated value,” Govus said.
She provided an example: a refrigerator purchased for $900 in 2020. With 30 percent depreciation, it would have an assessed taxable value in 2023 of $630. County and city of Asheville property taxes would come out to $5.61.
How will the County deal with depreciation?
“The county currently uses depreciation schedules for personal property that the N.C. Department of Revenue develops yearly. You can find them here.
How does one plan for this?
“If individuals are considering buying short-term rentals or using their own home as a short-term rental, understanding all of the legal parameters, including property assessment, will help them be more successful in their endeavors,” Govus said.
Will they do spot checks for enforcement?
“No. This is a self-reporting system, and we really rely on property owners to report,” Govus said. “Property owners should be aware that there may be penalties for not reporting.”
This whole thing is a mess, with inadequate notification, planning, or public comment.
“Unfortunately, holding public comment on a long-standing law would not provide much support for property owners,” Govus said. “With this mailing and with the conversations that are going on around property assessment, we can help owners better understand their responsibility.”
Govus said the county also has a number of property assessment clinics happening now, which give residents a chance to talk to assessors. The dates and times, as well as call-in numbers for people who want to participate remotely, are available here.
Got a question? Send it to John Boyle at email@example.com or (828) 337-0941.