Property Tax Modifications.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 1
HOUSE BILL 1181

Short Title: Property Tax Modifications. (Public)
Sponsors: Representatives Cervania and Rubin (Primary Sponsors).
For a complete list of sponsors, refer to the North Carolina General Assembly web site.
Referred to: Rules, Calendar, and Operations of the House
May 4, 2026
*H1181-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO MODIFY THE INCOME ELIGIBILITY LIMIT FOR THE ELDERL Y OR 2
DISABLED PROPERTY TAX HOMESTEAD EXCLUSION FOR MARRIED COUPLES, 3
TO ELIMINATE THE DEF ERRED TAX LIABILITY UNDER THE PROPERTY T AX 4
HOMESTEAD CIRCUIT BR EAKER, TO EXPAND THE PROPERTY TAX 5
HOMESTEAD CIRCUIT BR EAKER BY PROVIDING A N ALTERNATE MEANS TO 6
QUALIFY BASED ON ARE A MEDIAN INCOME, TO APPROPRIATE MONEY TO 7
THE NORTH CAROLINA A SSOCIATION OF COUNTY COMMISSIONERS TO 8
ASSIST COUNTIES WITH PROPERTY REAPPRAISA LS, AND TO IMPOSE AN 9
EXCISE TAX ON THE TRAN SFER OF CONTROLLING INTERESTS IN ENTITIE S 10
THAT HOLD AN INTEREST IN REAL PROPERTY. 11
The General Assembly of North Carolina enacts: 12
SECTION 1.(a) G.S. 105-277.1 is amended by adding a new subsection to read: 13
"(a3) Spousal Income Limi tation. – Married applicants residing with their spouses may 14
qualify for the property tax homestead exclusion provided in this section if their income does not 15
exceed one hundred fifteen percent (115%) of the income eligibility limit determined under 16
subsection (a2) of this section." 17
SECTION 1.(b) G.S. 105-277.1B reads as rewritten: 18
"§ 105-277.1B. Property tax homestead circuit breaker. 19
(a) Classification. – A permanent residence owned and occupied by a qualifying owner 20
is designated a special class of pr operty under Article V, Section 2(2) of the North Carolina 21
Constitution and is taxable in accordance with this section. 22
(b) Definitions. – The definitions provided in G.S. 105-277.1 apply to this section. 23
(c) Income Eligibility Limit. – The income eligibil ity limit provided in 24
G.S. 105-277.1(a2) applies to this section. 25
(c1) AMI Limit. – Seventy percent (70%) of th e area median income for a household of 26
two persons in the county in which the property is located , as determined by the most recent 27
figure reported by the United States Department of Housing and Urban Development as of 28
January 1 preceding the taxable year for which the benefit is claimed. 29
(d) Qualifying Owner. – For the purpose of qualifying for the property tax homest ead 30
circuit breaker under this section, a qualifying owner is an owner who meets all of the following 31
requirements as of January 1 preceding the taxable year for which the benefit is claimed: 32
(1) The owner has an income for the preceding calendar year of n ot more than 33
one hundred fifty percent (150%) of the income eligibility limit specified 34
General Assembly Of North Carolina Session 2025
Page 2 House Bill 1181-First Edition
maximum amount authorized in subsection (c) subsection (f) or (f1) of this 1
section.section, as applicable. 2
(2) The owner has owned and occupied the property as a permanent residence for 3
at least five consecutive years and has occupied the property as a permanent 4
residence for at least five years.the required amount of time under subsection 5
(f) or (f1) of this section, as applicable. 6
(3) The owner is at least 65 years of age or totally and permanently disabled. 7
(4) The owner is a North Carolina resident. 8
(e) Multiple Owners. – A permanent residence owned and occupied by husband and wife 9
is entitled to the full benefit of the property tax homestead c ircuit breaker notwithstanding that 10
only one of them meets the length of occupancy and ownership requirements and the age or 11
disability requirement of this section. When a permanent residence is owned and occupied by 12
two or more persons other than husband and wife, no property tax homestead circuit breaker is 13
allowed unless all of the owners qualify and elect to defer taxes under this section.qualify. 14
(f) General Tax Limitation. – A qualifying owner may defer that has owned the property 15
as a permanent residence for at least five consecutive years and has occupied the property as a 16
permanent residence for at least five years is relieved of the portion of the principal amount of 17
tax that is imposed for the current tax year on his or her permanen t residence and exceeds the 18
percentage of the qualifying owner's income set out in the table in this subsection. If a permanent 19
residence is subject to tax by more than one taxing unit and the total tax liability exceeds the tax 20
limit imposed by this secti on, then both the taxes due under this section and the taxes deferred 21
under this section must be apportioned among the taxing units based upon the ratio each taxing 22
unit's tax rate bears to the total tax rate of all units. 23
Income Over Income Up To Percentage 24
-0- Income Eligibility Limit 4.0% 25
Income Eligibility Limit 150% of Income Eligibility Limit 5.0% 26
(f1) Alternate Tax Limitation. – A qualifying owner that has owned the property as a 27
permanent residence for at least 10 consecutive years and has occupied the property as a 28
permanent residence for at least 10 years is relieved of the portion of the principal amount of tax 29
that is imposed for the current tax year on his or her permanent residence and exceeds the 30
percentage of the qualifying owner's income set out in the table in this subsection. If a permanent 31
residence is subject to tax by more than one taxing unit and the total tax liability exceeds the tax 32
limit imposed by this section, then the taxes due under this sectio n must be apportioned among 33
the taxing units based upon the ratio each taxing unit 's tax rate bears to the total tax rate of all 34
units. If the AMI Limit is less than or equal to one hundred fifty percent (150%) of the Income 35
Eligibility Limit, a qualifying owner shall receive the benefit under subsection (f) of this section. 36
Income Over Income Up To Percentage 37
150% of Income Eligibility Limit AMI Limit 6.0% 38
(g) Temporary Absence. – An otherwise qualifying owner does not lose the benefit of 39
this circuit breaker because of a temporary absence from his or her permanent residence for 40
reasons of health, or because of an extended absence while confined to a rest home or nursing 41
home, so long as the residence is unoccupied or occupied by the owner's spouse or o ther 42
dependent. 43
(h) Deferred Taxes. – The difference between the taxes due under this section and the 44
taxes that would have been payable in the absence of this section are a lien on the real property 45
of the taxpayer as provided in G.S. 105 -355(a). The difference in taxes must be carried forward 46
in the records of each taxing unit as deferred taxes. The deferred taxes for the preceding three 47
fiscal years are due and payable in accordance with G.S. 105-277.1F when the property loses its 48
eligibility for deferra l as a result of a disqualifying event described in subsection (i) of this 49
section. On or before September 1 of each year, the collector must send to the mailing address of 50
General Assembly Of North Carolina Session 2025
House Bill 1181-First Edition Page 3
a residence on which taxes have been deferred a notice stating the amount of deferred taxes and 1
interest that would be due and payable upon the occurrence of a disqualifying event. 2
(i) Disqualifying Events. – A property receiving t he benefit under this section loses its 3
eligibility for the benefit as a result of a disqualifying event. The tax for the fiscal year that begins 4
in the calendar year in which the disqualifying event occurs is computed as if the property had 5
not been classified for the property tax benefit under this section for that year. Each of the 6
following constitutes a disqualifying event: 7
(1) The owner transfers the residence. Transfer of the residence is not a 8
disqualifying event if (i) the owner transfers the residence to a co -owner of 9
the residence or, as part of a divorce proceeding, to his or her spouse and (ii) 10
that individual occupies or continues to occupy the property as his or her 11
permanent residence. 12
(2) The owner dies. Death of the owner is not a disqualifying event if (i) the 13
owner's share passes to a co-owner of the residence or to his or her spouse and 14
(ii) that individual occupies or continues to occupy the property as his or her 15
permanent residence. 16
(3) The owner ceases to use the property as a permanent residence. 17
(j) Gap in Deferral. – If an owner of a residence on which taxes have been deferred under 18
this section is not eligible for continued deferral for a tax year, the deferred taxes are carried 19
forward and are not due and payable until a disqualifying event occurs. If the owner of the 20
residence qualifies for deferral after one or more years in which he or she did not qualify for 21
deferral and a disqualifying event occurs, the years in which the owner did not qualify are 22
disregarded in determining the preceding three years for which the deferred taxes are due and 23
payable. 24
(k) Repealed by Session Laws 2008-35, s. 1.2, effective July 1, 2008. 25
(l) Creditor Limitations. – A mortgagee or trustee that elects to pay any tax deferred by 26
the owner of a residence subject to a mortgage or deed of trust does not acquire a right to foreclose 27
as a result of the election. Except for requirements dictated by federal law or regulation, any 28
provision in a mortgage, deed of trust, or other agreement that prohibits the owner from deferring 29
taxes on property under this section is void. 30
(m) Construction. – This section does not a ffect the attachment of a lien for personal 31
property taxes against a tax-deferred residence. 32
(n) Application. – An application for property tax relief provided by this section should 33
be filed during the regular listing period, but may be filed and must be accepted at any time up 34
to and through June 1 preceding the tax year for which the relief is claimed. Persons may apply 35
for this property tax relief by entering the appropriate information on a form made available by 36
the assessor under G.S. 105-282.1." 37
SECTION 1.(c) G.S. 105-282.1(a) is amended by adding a new subdivision to read: 38
"(3) Triennial application required. – An owner of a property eligible for the 39
property tax homestead circuit breaker under G.S. 105-277.1B must file an 40
application for the benefit to receive it. Once the application has been 41
approved, the owner is entitled to the benefit for the current tax year and the 42
two subsequent tax years thereafter unless the property loses its eligibility for 43
the benefit as a result of a disqualifying event under G.S. 105-277.1B(i)." 44
SECTION 1.(d) G.S. 105-277.1F(a)(2) is repealed. 45
SECTION 1.(e) G.S. 105-365.1(a)(3) is repealed. 46
SECTION 1.(f) G.S. 153A-148.1 reads as rewritten: 47
"§ 153A-148.1. Disclosure of certain information prohibited. 48
(a) Disclosure Prohibited. – Notwithstanding Chapter 132 of the General Statutes or any 49
other law regarding access to public records, local tax records that contain information about a 50
taxpayer's income or receipts are not public r ecords. A current or former officer, employee, or 51
General Assembly Of North Carolina Session 2025
Page 4 House Bill 1181-First Edition
agent of a county who in the course of service to or employment by the county has access to 1
information about the amount of a taxpayer's income or receipts may not disclose the information 2
to any other person unless the disclosure is made for one of the following purposes: 3
… 4
(6) To include on a property tax receipt the amount of property taxes due and the 5
amount of property taxes deferred on a residence classified under 6
G.S. 105-277.1B, the property tax homestead circuit breaker. 7
…." 8
SECTION 1.(g) G.S. 160A-208.1 reads as rewritten: 9
"§ 160A-208.1. Disclosure of certain information prohibited. 10
(a) Disclosure Prohibited. – Notwithstanding Chapter 132 of the General Statutes or any 11
other law regarding acce ss to public records, local tax records that contain information about a 12
taxpayer's income or receipts are not public records. A current or former officer, employee, or 13
agent of a city who in the course of service to or employment by the city has access to information 14
about the amount of a taxpayer's income or receipts may not disclose the information to any other 15
person unless the disclosure is made for one of the following purposes: 16
… 17
(4) To include on a property tax receipt the amount of property taxes due and the 18
amount of property taxes deferred on a residence classified under 19
G.S. 105-277.1B, the property tax homestead circuit breaker. 20
…." 21
SECTION 2. Notwithstanding G.S. 105-380 and G.S. 105-381, the governing body 22
of a taxing unit shall release the u npaid deferred taxes under G.S. 105-277.1B on any property 23
for which a disqualifying event has not occurred. Any lien under G.S. 105-355(a) corresponding 24
to the released deferred taxes is also extinguished. 25
SECTION 3.(a) There is appropriated from the General Fund to the North Carolina 26
Association of County Commissioners (Association) the nonrecurring sum of twenty million 27
dollars ($20,000,000) for the 2026 -2027 fiscal year to be used by the Association to provide 28
grants to local governments for the purpos e of transitioning those governments to shortened 29
reappraisal cycles and thereby ensuring more frequent and accurate property valuations and to 30
educate the general public on property taxes and property tax relief programs offered by the State. 31
Grant funds provided under this section shall be used by local governments for (i) technical 32
assistance, (ii) public education regarding the property tax system and property tax relief 33
programs, and (iii) one-time capital investments in technological infrastructure that improve local 34
capacity and efficiency in conducting reappraisals, including the acquisition of specialized 35
software, data migration, and the implementation of digital systems. In awarding grants under 36
this section, the Association shall prioritize awarding grants to local governments operating on a 37
reappraisal cycle of more than four years. For purposes of this section, "local governments" 38
means counties, cities, or towns conducting reappraisals of property under Subchapter II of 39
Chapter 105 of the General Statutes as of the effective date of this section. 40
SECTION 3.(b) This section becomes effective July 1, 2026. 41
SECTION 4.(a) Subchapter I of Chapter 105 of the General Statutes is amended by 42
adding a new Article to read: 43
"Article 8F. 44
"Excise Tax on Controlling Interest Transfers. 45
"§ 105-228.40. Purpose and scope. 46
The tax imposed by this Article is intended to ensure parity in the taxation of real property 47
transfers, whether such transfer is accomplished by the recordation of a deed or by the transfer 48
of a controlling interest in an entity that owns an interest in real property in this State. 49
"§ 105-228.41. Definitions. 50
The following definitions apply in this Article: 51
General Assembly Of North Carolina Session 2025
House Bill 1181-First Edition Page 5
(1) Controlling interest. – Either of the following: 1
a. In the case of a corporation, either more than fifty percent (50%) of 2
the total combined voting power of all classes of stock of such 3
corporation, or more than fifty percent (50%) of the capital, profits, or 4
beneficial interest in the voting stock of such corporation. 5
b. In the case o f a partnership, association, trust, or other entity, more 6
than fifty percent (50%) of the capital, profits, or beneficial interest in 7
such partnership, association, trust, or other entity. 8
(2) Entity. – A corporation, partnership, association, trust, limi ted liability 9
company, or other organization. 10
(3) Real property interest. – Any interest in real property located in this State. 11
(4) Value. – The fair market value , including any stated consideration 12
corresponding to th ereto, of the real property interest owned by the entity. 13
There is a rebuttable presumption that the value is the higher of (i) the total 14
assessed ad valorem tax value of the property at the time of the transfer or (ii) 15
the prior purchasing price of the property if the purchase occurred within five 16
years of the transfer. 17
"§ 105-228.42. Imposition of excise tax; rate. 18
(a) Imposition. – An excise tax is levied on the sale or transfe r, by one or more persons 19
or by one or more transactions, within any 36-month period, of a controlling interest in an entity 20
that possesses, directly or indirectly, a real property interest in the State. This tax applies if the 21
value of the real property interest exceeds one hundred dollars ($100.00). 22
(b) Rate. – The tax rate is one dollar ($1.00) on each five hundred dollars ($500.00) , or 23
fractional part thereof, of the value of the real property interest. 24
"§ 105-228.43. Reporting and payment; duties of Register of Deeds. 25
(a) Report and Payment. – Every person who acquires a contro lling interest in an entity 26
subject to this Article shall, within 30 days of the transfer, file a return with the Register of Deeds 27
in each county where the entity holds a real property interest. The tax must be paid at the time 28
the return is filed. 29
(b) Recording. – Upon payment of the tax, the Register of Deeds shall record a "Notice 30
of Controlling Interest Transfer" in the consolidated real property index. This notice shall not be 31
required to be a deed but shall serve as public notice of the satisfaction of the tax liability under 32
this Article. 33
"§ 105-228.44. Exemptions. 34
The tax imposed by this Article does not apply to the following: 35
(1) Transfers of an interest in an entity that is traded on a public stock exchange. 36
(2) Transfers resulting from death, whether by will or statutory succession. 37
(3) Transfers between spouses. 38
(4) Transfers that are exempt under G.S. 105-228.29 except transfers by "merger" 39
under subdivision (7) of that section. 40
"§ 105-228.45. Penalties. 41
(a) Failure to File. – Any person required to file a return under this Article who fails to 42
do so within the time required shall be subject to a penalty equal to twenty-five percent (25%) of 43
the tax due. 44
(b) Fraud. – Any person who willfully provides false information regarding the value of 45
the property or the percentage of interest transferred is guilty of a Class 1 misdemeanor." 46
SECTION 4.(b) This section becomes effective January 1, 2027, and applies to 47
transfers occurring on or after that date. 48
SECTION 5. Section 1 of this act is effective for taxable years beginning on or after 49
July 1, 2027. Section 3 of this act becomes effective July 1, 2026. Except as otherwise provided, 50
the remainder of this act becomes effective July 1, 2027. 51