Section 1.

Under current law, the property tax homestead exclusion for State residents who are either over 65 years or totally and permanently disabled and who meet the income eligibility limits, set at greater of $25,000 or 50% of the appraised value of the residence, is excluded from taxation. Revises the property tax homestead exclusion so that the value of the exclusion is the greater of $50,000 or 50% of the residence’s appraised value. Starting for the tax year that begins on July 1, 2026, increases the base amount of the income eligibility limit under the elderly or disabled property tax homestead exclusion (GS 105-277.1) from $25,000 to $48,000.

Makes conforming changes.

Under current law, the property tax homestead exclusion for disabled veterans, set at the first $45,000 of appraised value of the residence, is excluded from taxation. Revises the property tax homestead exclusion for disabled veterans under GS 105-277.1C, so that the value of the exclusion is the lesser of 50% of the appraised value of the residence or $100,000. 

Enacts GS 105-277.1E, concerning homeowner advantage property tax relief for a permanent residence owned and occupied by a qualifying owner, taxable as follows.  Defines a qualifying owner as one who meets all of the following requirements as of January 1 preceding the taxable year for which the benefit is claimed: (1) the owner has occupied the property as a permanent residence for at least two years immediately preceding the owner's filing for property tax relief and (2) the owner is a North Carolina resident. Also defines baseline value, baseline year, owner, permanent residence, and rate of inflation.  

Establishes a general limitation, subject to the two listed exception under which there was a reappraisal of the residence that the taxable value of the permanent residence of a qualifying owner cannot exceed its baseline value by an amount more than (1) the average rate of inflation per year between consecutive general reappraisals, or 3% per year, whichever is less, and (2) 15% cumulatively. Specifies that a temporary absence due to health, or because of an extended absence while confined to a rest home or nursing home, does not deprive the owner of the tax relief so long as the residence is unoccupied or occupied by the owner's spouse or other dependent. Allows for permanent residences jointly owned and occupied by a husband and wife to qualify for the full benefit of the property tax relief. In cases of joint ownership by other persons, requires that all persons be a qualifying owner to obtain the tax relief. Provides for availability of tax relief upon (1) death of owner or (2) transfer of the owner’s residence under circumstances described. Directs that an application for property tax relief provided should be filed during the regular listing period but may be filed and must be accepted at any time up to and through June 1 preceding the tax year for which the relief is claimed.

Enacts GS 105-277.1G, concerning the elderly property tax homestead circuit breaker, as follows. Specifies that a permanent residence owned and occupied by a qualifying owner (defined below) is designated a special class of property, taxable as set forth below. Incorporates the definitions of GS 105-277.1 and the income eligibility limit of GS 105-277.1 into GS 105-277.1G.

Allows a qualifying owner to defer the portion of the principal amount of tax that is imposed for the current tax year on his or her permanent residence and exceeds the percentage of the qualifying owner's income set out in statute’s table:  

Income over          Income up to                                             Percentage
0                          Income eligibility limit (i.e., $48,000)           0%

Specifies that if a permanent residence is subject to tax by more than one taxing unit and the total tax liability exceeds the tax limit imposed by GS 105-277.1G, then both of the taxes due and the taxes deferred under GS 105-277.1G must be apportioned among the taxing units based upon the ratio each taxing unit's tax rate bears to the total tax rate of all units.

Defines a qualifying owner as one who meets all of the following requirements as of January 1 preceding the taxable year for which the benefit is claimed: (1) the owner has an income for the preceding calendar year of not more than 100% of the income eligibility limit; (2) the owner has owned the property as a permanent residence for at least 10 consecutive years and has occupied the property as a permanent residence for at least 10 years; (3) the owner is at least 85 years of age; and (4) the owner is a North Carolina resident.

Allows for permanent residences jointly owned and occupied by a husband and wife to qualify for the full benefit of the property tax relief. In cases of joint ownership by other persons, requires that all persons be a qualifying owner to obtain the tax relief. Specifies that a temporary absence due to health, or because of an extended absence while confined to a rest home or nursing home, does not deprive the owner of the tax relief so long as the residence is unoccupied or occupied by the owner's spouse or other dependent.

Specifies that the difference between the taxes due under the section and the taxes that would have been payable in the absence of the section are a lien on the real property of the taxpayer as provided in GS 105-355(a). Requires the difference in taxes to be carried forward in the records of each taxing unit as deferred taxes. Specifies that the deferred taxes for the preceding three fiscal years are due and payable in accordance with GS 105-277.1F when the property loses its eligibility for deferral as a result of a disqualifying event described in subsection (i) of this statute. Provides for a notice stating the amount of deferred taxes and interest that would be due and payable upon the occurrence of a disqualifying event to be sent on or before September 1 of each year. Lists three disqualifying events including death of the owner or transfer of the residence unless the described conditions apply. Provides for gaps in deferrals of taxes and limitations on creditors, as described. Specifies that GS 105-277.1G does not affect the attachment of alien for personal property taxes against a tax-deferred residence. Sets forth a June 1 filing deadline for applications for tax relief under GS 105-277.1G, as described.

Enacts GS 105-277.1H, to ensure continuity in property tax relief for new owners of a primary residence by allowing owners to transfer property tax relief to their new primary residence, as described, so long as the owner continues to meet all other requirements for property tax relief and files an application with the assessor of the county in which the new primary residence is situated. Incorporates the definitions in GS 105-277.1 into the statute.

Amends GS 105-282.1(a)(2) (applications for property tax exemptions or exclusions) to provide for the applications in GS 105-277.1E and GS 105-277.1H. Exempts property that falls under GS 105-277.1E from GS 105-283 (uniform appraisal standards) and GS 105-284 (uniform assessment standards).

Makes conforming changes to GS 105-309 (contents of an abstract) and to the definition of property tax relief in GS 105-277.1 to account for newly enacted GS 105-277.1E and GS 105-277.1G.

Effective for taxes imposed for taxable years beginning on or after July 1, 2026.

Section 2.

Enacts GS 1C-1605 (a homestead exemption for forced sale), which applies to real or personal property owned by a debtor that the debtor has used as the debtor's primary residence for a period of at least 40 consecutive months from the date of purchase of the property for claims in bankruptcy or 24 consecutive months from the date of purchase of the property for all other claims, as follows. Specifies that a judgment entered against the owner of property subject to the statute may be placed as a lien against the property, but the property is exempt from forced sale under Article 29B of GS Chapter 1 or any other provision of State law. Specifies that the lien may be enforced any time ownership of the property is transferred. Provides that the exemption is inapplicable to seven listed claims. Applies to judgments entered against a debtor on or after October 1, 2025.

Section 3.

Directs the Department of Revenue (Department) to study ways to abolish the statutory framework for the listing, appraisal, and assessment of real property under GS Chapter 105 and develop a framework to eliminate property taxes on real property in this State, as described. Requires the Department to develop a framework to replace property tax revenues through State and local budget reductions, sales-based consumption taxes, and locally determined consumption taxes. Requires the Department to report its findings to the specified NCGA committee by February 1, 2026.