1. Fixed the Sales Tax for Repair, Maintenance and Installation (RMI) Services
No single piece of legislation passed by the North Carolina General Assembly last year will have a bigger impact on home builders, remodelers and many of our associates than the sales tax fix on RMI included in HB 1030 (2016 Appropriations Act). These important tax law changes significantly modify the taxation of repair, maintenance and installation (RMI) services, which became effective on March 1 of this year. All labor pursuant to a “real property contract” (which is between a real property contractor and another person to perform construction, reconstruction, or remodeling with respect to a capital improvement) is now exempt from taxation. A “capital improvement” is defined as “an alteration to real property that is new construction, reconstruction, or remodeling of a building, structure, or fixture on land that becomes part of the real property or is permanently installed in the real property”. Among the specific examples of a “capital improvement” is “performance of work that requires the issuance of a permit under the State Building Code” (a residential project that costs at least $15,000). Other examples include painting, wallpapering and landscape services. Specifically excluded from taxation are services performed to resolve an issue that was part of a real property contract within twelve months of the new structure being occupied for the first time (warranty call-backs). Home inspections, debris removal, pest control and fees for inspections required by law are also specifically exempt. Those subcontractors who operate as a “retailer-contractor” (i. e., provide subcontractor services to builders and others) are also exempt when the entity acts as a real property contractor.
SAVINGS TO MEMBERS: Millions of dollars in avoided sales
2. Implementation of Exemption of Builders’ Inventory from Property Taxation
HB 168 (Session Law 2015-223), effective for taxable years beginning on or after 07/01/16 and applies to subdivision of land or other improvements made after 07/01/15) exempts from the property tax the increase in value of real property held for sale by a builder to the extent the increase is attributable to subdivision or other improvement. “Builder” is defined as a taxpayer engaged in the business of buying real property, making improvements to it, and then reselling it. Thus, both developers and home builders qualify for this tax exclusion for both land development and building of single family and duplex homes. The builder must apply for this exemption annually and it can last no longer than three years.
SAVINGS TO MEMBERS: The NAHB Economics Department
3. Successfully urged the Building Code Council to enact important code changes which produced significant
NCHBA Director of Construction & Codes Robert Privott is a
constant fixture at all meetings of the Building Code Council (BCC) and its various committees. His expert advocacy and credibility with the BCC again produced significant cost savings to homebuyers thorough several key amendments to the code. Examples include: Amended the 2012 Plumbing Code to implement NCHBA-sought legislation in 2015 to provide a fix for 90+ high energy furnaces which shut down on extremely cold days when drain lines freezes; fix allows both this condensate and AC condensation to drain to building drainage system per manufacturers’ recommendation.
SAVINGS TO MEMBERS: Hundreds of thousands of dollars in
avoided cost as well as future energy savings by preserving the option of high efficiency furnace installation. Amended code to permit excess mortar that falls into 2” air space between brick veneer and exterior wall sheathing to meet code. SAVINGS TO MEMBERS: Hundreds of thousands of dollars
just to one of our members as a result of this change. Successfully amended the Mechanical Code so that HVAC design and load sizing calculations are no longer required as a precondition for permitting, inspections, or certificates of occupancy. SAVINGS TO MEMBERS: Hundreds of
4. Secured Appropriation to Put NC Building Code On-Line While the NC Building Codes are currently available on-line via the Department of Insurance’s website, the text is read only and not searchable. The final budget conference report for HB 1030 included an appropriation of $425,000 to the NC Department of Insurance to make the Building Code Registry fully on-line and searchable. Thus, our members and the public will be able to access the family of NC building codes on-line without having to purchase the hard copy books for the current edition of the codes.
SAVINGS TO MEMBERS: Thousands of dollars by free on-line
5. Secured Vesting Protection for Multi-Phase Projects HB 483 (Land-Use Regulatory Changes) was passed on the last day of the session and contained an important provision that vests all phases of a multi-phase development at time of application for the initial phase. While this language is limited to large projects, it does provide vesting protection to those projects for seven (7) years.
SAVINGS TO MEMBERS: Millions in avoided costs by preventing
6. No Building Permit for Minor Repairs
This provision, which was inserted into SB 770 (North Carolina Farm Act of 2016) at the request of NCHBA to clarify existing law, excludes certain minor repairs in residential and farm structures from any requirement to obtain a building permit. Specifically excluded is the replacement of windows, doors, exterior siding, or the pickets,