Section 1

Subject to voter approval at the statewide general election on November 3, 2026, amends Section 2 of Article V of the NC Constitution to allow the NCGA to use area median income as criterion for affording property tax relief on a statewide basis by a general law uniformly applicable across local governments. Includes ballot language and provides for enrollment by the Secretary of State if the majority of voters approve the amendment. Deems the amendment effective upon certification.

Section 2

Amends GS 105-277.1B to change the income eligibility limit for the property tax homestead circuit breaker, previously tied to the limit established for the elderly or disabled property tax homestead exclusion under GS 105-277.1. Establishes the limit at 100% of the area median income of the county of the permanent residence for non-married qualifying owners, and 115% of the area median income of the county of the permanent residence for married qualifying owners. Makes conforming changes. Replaces the tax limitation based on the previous income eligibility limit to instead allow a qualifying owner to defer a proportional amount of the imposed tax in an amount equal to the proportional amount of the homestead's appraised value that does not exceed the county median appraised value of the owner-occupied residential property. Adds a new provision deeming liens established from deferred taxes satisfied upon the qualifying owner's death or a devise of the property to a member of the owner's family, as defined. Further adds that transfer of the residence from the owner to a member of the owner's family who satisfies the income eligibility requirement is not a disqualifying event. Repeals language making the owner's death a disqualifying event unless the owner's share passes to a co-owner or to a spouse who occupies the property as their permanent residence. Effective for taxable years beginning on or after July 1, 2027, subject to the approval of the constitutional amendment proposed in Section 1.

Section 3

Enacts new GS 105-278.7A exempting real and personal property from property tax if it is owned by an eligible owner and used for a charitable purpose in the operation of affordable rental housing, if the statute’s requirements are met. Eligible owners are an eligible join venture or an eligible nonprofit corporation. Charitable purpose is defined as one that has human and philanthropic objectives; it is an activity that benefits humanity or a significant rather than limited segment of the community without expectation of pecuniary profit or reward. Defines affordable rental housing as a rental development consisting of land and improvements in which more than 50% of the units are qualifying units (where rent charged or the published rent is at or below the rent limit, and it is occupied by, or set aside for, a tenant whose income is at or below the income limit). Defines the income limit as rent, plus a utility allowance calculated in accordance with the requirements of the North Carolina Housing Finance Agency, that does not exceed 30% of the income limit.

Set out requirements for government supported affordable rental housing and for non-government supported affordable rental housing. Exempts real and personal property providing government-supported affordable rental housing from property taxation in any year in which all of these conditions are met: (1) the property is owned and operated by an eligible nonprofit corporation or an eligible joint venture; (2) either a. the eligible owner is an eligible joint venture receiving low-income housing credits under section 42 of the Code and is in compliance with any applicable regulatory requirements, or b. the eligible owner finances the acquisition, rehabilitation, development, or operation of the property, or any combination thereof, with tax-exempt mortgage revenue bonds, qualified 501(c)(3) bonds, federal direct loans or grants, State loans or grants, or loans or grants provided by a local jurisdiction where the property is located. Specifies that the government support must require the execution of a deed restriction or enforceable, verifiable agreement with a public agency requiring that the property be operated as affordable rental housing in for at least 15 years from the date the financing or financial assistance was initially provided; excludes from government support payments made to the owner under the federal Housing Choice Voucher Program or other local, State, or federal voucher program. Exempts real and personal property providing non-government supported affordable rental housing from property tax in any year in which the following conditions are met: (1) the property is and has been 100% owned and operated by an eligible nonprofit corporation for at least five years; (2) the eligible nonprofit does not receive any funding or financial assistance, other than grants, from a for-profit affiliate; (3) the eligible nonprofit does not lease the affordable rental housing land or improvements to another entity (excluding leasing affordable rental housing units to tenants); and (4) the eligible nonprofit has executed a deed restriction in favor of the county and any municipality in which the property is located requiring that the property be operated as affordable rental housing for a period of at least 15 years from the date of application. Specifies that the restriction must require that the owner provides the necessary reporting annually to all grantees for the term of the deed restriction, and that the deed restriction must state that any grantee, or its assigns, has the right to enforce the terms of the restriction.

Sets the amount of the exemption as the percentage of the appraised value that is equal to the percentage of qualifying units. Sets the exemption amount at 100% of the appraised value for owners that meet the requirements of the safe harbor in Section 3 of Internal Revenue Service Rev. Proc. 96-32. Allows a transition period of one taxable year for improved and occupied rental housing property that is purchased by an eligible owner for which the eligible owner cannot provide the total household income for each qualifying unit at the time of application but that otherwise meets the statute’s requirements; during this period defines a "qualifying unit" as an affordable rental housing unit for which the rent charged is at or below the rent limit for purposes of determining the exemption amount.

Sets out the process for applying for the exemption. Requires owners granted an exemption to annually certify that it remains in compliance and to provide the required items.

Allows real property held by an eligible owner as a future site for affordable rental housing to be classified under this statute for no more than five years. Requires that the taxes be carried forward in the taxing unit’s records as deferred taxes and make the deferred taxes due when the property loses it is eligibility for deferral because of a disqualifying event. Makes conforming changes to GS 105-277.1F.

Amends GS 105-278.6 (exempting real and personal property owned by listed entities from taxation) (a)(8) by removing rental housing provided by a nonprofit organization providing housing to low or moderate income individuals and families from that statute’s tax exemption. Further amends the statute by shortening the time that property held by the organizations listed in the statute as a future site for housing can be classified and exempt from taxation under the statute to no more than five (was, 10) years. Makes additional clarifying and technical changes.

Effective for taxes imposed for taxable years beginning on or after July 1, 2026, and, with respect to property held as a future site, applies to real property classified on or after that date. Requires an owner of low or moderate income rental housing property that is exempt under GS 105-278.6(a)(8) as of act’s effective date to reapply for the exemption by December 31, 2026, giving the assessor of the taxing unit any necessary documentation for compliance; failure to meet this requirement within the time limit subjects the property to discovery under GS 105-312.

Section 4

Appropriates $20 million from the General Fund to the NC Association of County Commissioners for 2026-27 to provide grants to local governments, as defined, to shorten reappraisal cycles. Limits use of grants to technical assistance and one-time capital investments in described technological infrastructure. Requires prioritization of grants to local governments operating on a reappraisal cycle of more than four years. Effective July 1, 2026.