Rising home values are causing big challenges for some older North Carolina homeowners. (Image: Adobe Stock)
In 1982, Mary Patrica Stumpf and her husband Dale bought a home in North Raleigh for $80,000. Forty-two years later, the house on a half-acre in the pricey Country Club Hills community is valued at more than a $1 million.
To the casual eye, Stumpf is winning. But such big increases in property value are not always a blessing for aging, retired residents. As property values rise, so do city and county taxes.
Mary Patricia Stumpf (Photo: Greg Childress)
Stumpf is now an 81-year-old widow who survives on modest retirement income. She paid $7,059 in property taxes last year on an assessed property value of $645,785. After the recent Wake County revaluation, the assessed value of her home jumped nearly 70% to $1,097,560.
The initial assessment was an eye-opening $1.2 million. But Stumpf successfully appealed the revaluation and her property was reassessed at a lower amount. Stumpf told NC Newsline that her county tax bill under the new valuation will be $9,499, and could be more if a rate increase proposed by the Raleigh city manager is approved.
Seeking broader relief
Stumpf has lobbied state lawmakers to increase income eligibility caps for state property tax relief programs to make them accessible to residents with higher incomes. She wants, for example, income eligibility for the state’s Homestead Exclusion to be based on area median income for individual counties instead of the statewide $36,700 income cap.
“The very least the legislature could do is provide fair, equitable and uniform property tax relief for the elderly low income, especially in light of the rising taxes, cost of living, medical costs, insurance costs [and other expenses],” Stumpf said.
Stumpf’s savings account has begun to squeak under the weight of higher city and county taxes. She worries that the new assessed value of her home and tax increases proposed by city and county officials will eventually break the bank.
“If I have to dig into my savings each year and pay my property taxes, that [savings account] is dwindling year-by-year,” Stumpf said. “With the cost of living and everything, there’s no way I can manage.”
The area median income for Wake County and surrounding counties is $122,300 compared to $57,800 in Halifax County, which is one of the state’s low-wealth counties.
“Average median income varies from county to county and because cost of living, housing, taxes, etc. also vary from county to county, not ALL low income are benefiting from the intended tax relief the law was created to provide,” Stumpf said in a letter to Wake County lawmakers.
In addition to the income requirement, homeowners must be 65 or older or 100% disabled to qualify to the Homestead Exclusion. Homeowners who qualify can get $25,000 or 50% of their home value, whichever is greater, removed from assessed property values.
Residents can also apply for property tax relief through the Circuit Breaker program, which allows homeowners to defer a portion of property taxes owed on a permanent residence. Disabled veterans or their unmarried surviving spouse also receive a break. They can get $45,000 off their property tax value regardless of income.
Lawmakers are reluctant to make changes, Stumpf said, arguing that to do so would violate the uniformity clause in the state Constitution, which essentially ensures property is taxed the same. Lawmakers also contend low-wealth counties would lose valuable tax revenue if more people became eligible for the Homestead Exclusion.
Here what the uniformity clause says:
Stumpf contends that as currently structured, the Homestead Exclusion is not being applied uniformly because it depends upon the county in which one lives as to whether or not one is eligible for property tax relief via the income cap.
Hudson Vaughan (left) explains the Wake County property tax appeal system to a Raleigh resident during a recent workshop. (Photo: Greg Childress)
“For the General Assembly and our leadership to quibble over raising the Homestead Exemption cap from $36,700 to a reasonable and fair-for-ALL low income in the State cap (guaranteed by our Constitution) in light of the surplus in the State coffers, new income generated by State gambling, higher taxes, and the list goes on, does not make sense,” Stumpf wrote to lawmakers.
An issue in gentrifying communities
In the historically Black communities near downtown Raleigh, residents facing high property taxes due to development pressures and gentrification, are also struggling to pay higher property taxes and are seeking relief through both appeals and North Carolina’s property tax relief programs.
Anthony Pope, 66, was denied relief last year when he applied for the Circuit Breaker program, which had a $36,700 income cap. Pope, who is retired and lives on a pension and Social Security income, reapplied this year ahead of the June 1 deadline after the cap was raised to $55,050.
“I’m hoping that with the $55,050 cap that I will be eligible because with my combined income, my Social Security, my pension, it does not equate to $55,000,” Pope said.
The Circuit Breaker program is open to residents 65 years or older or those totally and permanently disabled. Residents with an annual income of $36,700 or less may defer the portion of property taxes that exceeds 4% of their income. Those earning more than $36,700 but less than $55,050 may defer the portion of property taxes that exceeds 5% of the owner’s income.
The deferred taxes become a lien on the property and the most recent three years of taxes become due if ownership of the property is transferred, the owner stops using it as a permanent residence or dies.
Pope, who is raising two minor sons, believes the program should be accessible to residents regardless of income.
“I may not have been eligible for it [last year] based on the income, but I think because of age and the length of time I’ve been here, certainly, they need to realize that the taxes in this city have skyrocketed, and they should try to do something to offset that,” Pope said.
Hudson Vaughan, who works for the North Carolina Housing Coalition’s Community Justice Collaborative, a project that supports historically Black communities in fights against displacement and gentrification, shares a similar view.
Vaughn has been working with residents in southeast Raleigh, encouraging them to appeal property valuations and to apply for property tax relief programs.
He said North Carolina’s tax relief programs don’t reach enough people.
“If you live in a county like Wake County, where if you’re on retirement and you have a spouse, even if you’re on a fixed income and it’s very little, if you make $37,000, you get none of that tax relief,” Vaughn said. “It doesn’t vary by AMI [area median income], it doesn’t extend for two household incomes. It doesn’t stagger down for higher income households. So, those homestead exemptions are very limited, and they don’t reach a lot of folks.”
Looking to other states
Stumpf noted that states such as Illinois have more progressive tax relief programs for senior citizens than North Carolina.
In Illinois, her 93-year-old sister-in-law has benefited from the state’s senior “assessment freeze,” which protects seniors against increases in assessed value by freezing the assessed value of a seniors’ property at its current value. To qualify for that program, the total household income cannot exceed $65,000.
Meanwhile, Stumpf understands the optics of her situation. She’s living in a house worth more than $1 million but is lobbying lawmakers for property tax relief.
“People will look at it this way; count your blessings, sell the property and you can live like a queen,” Stumpf said. “They don’t understand that old people chose where they wanted to live when they were young, they built relationships and friendships with neighbors, they feel safe because they know their neighbor and they have their medical facilities and physicians nearby.”
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