Will My Home Still Qualify as a Primary Residence if I Rent it While Working Out of Town?
Full Question:
Answer:
The answer will depend on all the circumstances involved, such as how long you will be residing elsewhere. If you file bankruptcy, a home used as a primary residence will be exempt under NC law up to $35,000 ($60,000 in certain cases of persons unmarried 65 or older). However, if the house is rented, or a portion of it is rented while you reside elsewhere, it may not qualify as a primary residence. A person can only have one primary residence. It may require that you spend more time at that residence than at any other.
Some factors used to determine a primary residence include:
Your place of employment.
The location of your family members' main home.
Your mailing address for bills and correspondence.
The address listed on your:
Federal and state tax returns,
Driver's license,
Car registration, and
Voter registration card.
The location of the banks you use.
The location of recreational clubs and religious organizations of which you are a member.
The examples of what qualifies as a "main home" are listed on the IRS website below:
http://www.irs.gov/publications/p523/ar02.html#en_US_publink100049858
Please see the following NC statute:
§ 1C-1601. What property exempt; waiver; exceptions.
(a) Exempt property. — Each individual, resident of
this State, who is a debtor is entitled to retain free of
the enforcement of the claims of creditors:
(1) The debtor's aggregate interest, not to exceed
thirty-five thousand dollars ($35,000) in value, in real
property or personal property that the debtor or a dependent
of the debtor uses as a residence, in a cooperative that
owns property that the debtor or a dependent of the debtor
uses as a residence, or in a burial plot for the debtor or a
dependent of the debtor; however, an unmarried debtor who
is 65 years of age or older is entitled to retain an
aggregate interest in the property not to exceed sixty
thousand dollars ($60,000) in value so long as the property
was previously owned by the debtor as a tenant by the
entireties or as a joint tenant with rights of survivorship
and the former co-owner of the property is deceased.
(2) The debtor's aggregate interest in any property, not to
exceed five thousand dollars ($5,000) in value of any unused
exemption amount to which the debtor is entitled under
subdivision (1) of this subsection.
(3) The debtor's interest, not to exceed three thousand five
hundred dollars ($3,500) in value, in one motor vehicle.
(4) The debtor's aggregate interest, not to exceed five
thousand dollars ($5,000) in value for the debtor plus one
thousand dollars ($1,000) for each dependent of the debtor,
not to exceed four thousand dollars ($4,000) total for
dependents, in household furnishings, household goods,
wearing apparel, appliances, books, animals, crops, or
musical instruments, that are held primarily for the
personal, family, or household use of the debtor or a
dependent of the debtor.
(5) The debtor's aggregate interest, not to exceed two
thousand dollars ($2,000) in value, in any implements,
professional books, or tools of the trade of the debtor or
the trade of a dependent of the debtor.
(6) Life insurance as provided in Article X, Section 5 of
the Constitution of North Carolina.
(7) Professionally prescribed health aids for the debtor or
a dependent of the debtor.
(8) Compensation for personal injury, including compensation
from private disability policies or annuities, or
compensation for the death of a person upon whom the debtor
was dependent for support, but such compensation is not
exempt from claims for funeral, legal, medical, dental,
hospital, and health care charges related to the accident or
injury giving rise to the compensation.
(9) Individual retirement plans as defined in the Internal
Revenue Code and any plan treated in the same manner as an
individual retirement plan under the Internal Revenue Code,
including individual retirement accounts and Roth retirement
accounts as described in section 408(a) and section 408A of
the Internal Revenue Code, individual retirement annuities
as described in section 408(b) of the Internal Revenue Code,
and accounts established as part of a trust described in
section 408(c) of the Internal Revenue Code.
(10) Funds in a college savings plan qualified under
section 529 of the Internal Revenue Code, not to exceed a
cumulative limit of twenty-five thousand dollars ($25,000),
but excluding any funds placed in a college savings plan
account within the preceding 12 months (except to the extent
any of the contributions were made in the ordinary course of
the debtor's financial affairs and were consistent with the
debtor's past pattern of contributions) and only to the
extent that the funds are for a child of the debtor and will
actually be used for the child's college or university
expenses.
(11) Retirement benefits under the retirement plans of other
states and governmental units of other states, to the extent
that these benefits are exempt under the laws of the state
or governmental unit under which the benefit plan is
established.
(12) Alimony, support, separate maintenance, and child
support payments or funds that have been received or to
which the debtor is entitled, to the extent the payments or
funds are reasonably necessary for the support of the debtor
or any dependent of the debtor.
(b) Definitions. — As used in this section, the following
definitions apply:
(1) "Internal Revenue Code" means Code as defined in
G.S. 105-228.90.
(2) "Value" means fair market value of an individual's
interest in property, less valid liens superior to the
judgment lien sought to be enforced.
(c) Waiver. — The exemptions provided in this
Article cannot be waived except by:
(1) Transfer of property allocated as exempt (and in that
event only as to the specific property transferred);
(2) Written waiver, after judgment, approved by the clerk or
district court judge. The clerk or district court judge must
find that the waiver is made freely, voluntarily, and with
full knowledge of the debtor's rights to exemptions and that
he is not required to waive them; or
(3) Failure to assert the exemption after notice to do so
pursuant to G.S. 1C-1603. The clerk or district court judge
may relieve such a waiver made by reason of mistake,
surprise or excusable neglect, to the extent that the rights
of innocent third parties are not affected.
(d) Recent purchases. — The exemptions provided in
subdivisions (2), (3), (4), and (5) of subsection (a) of
this section are inapplicable with respect to tangible
personal property purchased by the debtor less than 90 days
preceding the initiation of judgment collection proceedings
or the filing of a petition for bankruptcy, unless the
purchase of the property is directly traceable to the
liquidation or conversion of property that may be exempt and
no additional property was transferred into or used to
acquire the replacement property.
(e) Exceptions. — The exemptions provided in this
Article are inapplicable to claims:
(1) Of the United States or its agencies as provided by
federal law;
(2) Of the State or its subdivisions for taxes, appearance
bonds or fiduciary bonds;
(3) Of lien by a laborer for work done and performed for the
person claiming the exemption, but only as to the specific
property affected;
(4) Of lien by a mechanic for work done on the premises, but
only as to the specific property affected;
(5) For payment of obligations contracted for the purchase
of the specific real property affected;
(6) Repealed by Session Laws 1981 (Regular Session, 1982),
c. 1224, s. 6, effective September 1, 1982;
(7) For contractual security interests in the specific
property affected; provided, that the exemptions shall apply
to the debtor's household goods notwithstanding any contract
for a nonpossessory, nonpurchase money security interest in
any such goods;
(8) For statutory liens, on the specific property affected,
other than judicial liens;
(9) For child support, alimony or distributive award order
pursuant to Chapter 50 of the General Statutes;
(10) For criminal restitution orders docketed as civil
judgments pursuant to G.S. 15A-1340.38.
(f) Federal Bankruptcy Code. — The exemptions provided in
The Bankruptcy Code, 11 U.S.C. § 522(d), are not applicable
to residents of this State. The exemptions provided by this
Article and by other statutory or common law of this State
shall apply for purposes of The Bankruptcy Code,
11 U.S.C. § 522(b).
(g) Effect of exemptions. — Notwithstanding any other
provision of law, a creditor shall not obtain possession of
a debtor's household goods and furnishings in which the
creditor holds a nonpossessory, nonpurchase money security
interest until the creditor has fully complied with the
procedures required by G.S. 1C-1603.