Modify Homestead Exclusions.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 2
HOUSE BILL 59
Committee Substitute Favorable 6/25/25

Short Title: Modify Homestead Exclusions. (Public)
Sponsors:
Referred to:
February 6, 2025
*H59-v-2*
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, AND TO EXPAND THE PROPERTY TAX 5
HOMESTEAD CIRCUIT BR EAKER BY PROVIDING A N ALTERNATE MEANS TO 6
QUALIFY BASED ON AREA MEDIAN INCOME. 7
The General Assembly of North Carolina enacts: 8
SECTION 1.(a) G.S. 105-277.1 is amended by adding a new subsection to read: 9
"(a3) Spousal Income Limitation. – Married applicants residing with their spouses may 10
qualify for the property tax homestead exclusion provided in this section if their income does not 11
exceed one hundred fifteen percent (115%) of the income eligibility limit determined under 12
subsection (a2) of this section." 13
SECTION 1.(b) G.S. 105-277.1B reads as rewritten: 14
"§ 105-277.1B. Property tax homestead circuit breaker. 15
(a) Classification. – A permanent residence owned and occupied by a qualifying owner 16
is designated a special class of property under Article V, Section 2(2) of the North Carolina 17
Constitution and is taxable in accordance with this section. 18
(b) Definitions. – The definitions provided in G.S. 105-277.1 apply to this section. 19
(c) Income Eligibility Limit. – The inco me eligibility limit provided in 20
G.S. 105-277.1(a2) applies to this section. 21
(c1) AMI Limit. – Seventy percent (70%) of th e area median income for a household of 22
two persons in the county in which the property is located , as determined by the most recent 23
figure reported by the United States Department of Housing and Urban Development as of 24
January 1 preceding the taxable year for which the benefit is claimed. 25
(d) Qualifying Owner. – For the purpose of qualifying for the property tax homest ead 26
circuit breaker under this section, a qualifying owner is an owner who meets all of the following 27
requirements as of January 1 preceding the taxable year for which the benefit is claimed: 28
(1) The owner has an income for the preceding calendar year of n ot more than 29
one hundred fifty percent (150%) of the income eligibility limit specified 30
maximum amount authorized in subsection (c) subsection (f) or (f1) of this 31
section.section, as applicable. 32
(2) The owner has owned and occupied the property as a permanent residence for 33
at least five consecutive years and has occupied the property as a permanent 34
residence for at least five years.the required amount of time under subsection 35
(f) or (f1) of this section, as applicable. 36
General Assembly Of North Carolina Session 2025
Page 2 House Bill 59-Second Edition
(3) The owner is at least 65 years of age or totally and permanently disabled. 1
(4) The owner is a North Carolina resident. 2
(e) Multiple Owners. – A permanent residence owned and occupied by husband and wife 3
is entitled to the full benefit of the property tax homestead c ircuit breaker notwithstanding that 4
only one of them meets the length of occupancy and ownership requirements and the age or 5
disability requirement of this section. When a permanent residence is owned and occupied by 6
two or more persons other than husband and wife, no property tax homestead circuit breaker is 7
allowed unless all of the owners qualify and elect to defer taxes under this section. 8
(f) General Tax Limitation. – A qualifying owner may defer that has owned the property 9
as a permanent residence for at least five consecutive years and has occupied the property as a 10
permanent residence for at least five years is relieved of the portion of the principal amount of 11
tax that is imposed for the current tax year on his or her permanent residence and exceeds the 12
percentage of the qualifying owner's income set out in the table in this subsection. If a permanent 13
residence is subject to tax by more than one taxing unit and the total tax liability exceeds the tax 14
limit imposed by this section, then both the taxes due under this section and the taxes deferred 15
under this section must be apportioned among the taxing units based upon the rat io each taxing 16
unit's tax rate bears to the total tax rate of all units. 17
Income Over Income Up To Percentage 18
-0- Income Eligibility Limit 4.0% 19
Income Eligibility Limit 150% of Income Eligibility Limit 5.0% 20
(f1) Alternate Tax Limitation. – A qualifying owner that has owned the property as a 21
permanent residence for at least 10 consecutive years and has occupied the property as a 22
permanent residence for at least 10 years is relieved of the portion of the principal amount of tax 23
that is imposed for the current tax year on his or her permanent residence and exceeds the 24
percentage of the qualifying owner's income set out in the table in this subsection. If a permanent 25
residence is subject to tax by more than one taxing unit and the total tax liability exceeds the tax 26
limit imposed by this section, then the taxes due under this section must be apportioned among 27
the taxing units based upon the ratio each taxing unit 's tax rate bears to the total tax rate of all 28
units. If the AMI Limit is less than or equal to one hundred fifty percent (150%) of the Income 29
Eligibility Limit, a qualifying owner shall receive the benefit under subsection (f) of this section. 30
Income Over Income Up To Percentage 31
150% of Income Eligibility Limit AMI Limit 6.0% 32
(g) Temporary Absence. – An otherwise qualifying owner does not lose the benefit of 33
this circuit breaker because of a temporary absence from his or her permanent residence for 34
reasons of health, or because of an extended absence while confined to a rest home or nursing 35
home, so long as the residence is unoccupied or occupied by the owner's spouse or other 36
dependent. 37
(h) Deferred Taxes. – The difference between the taxes due under this section and the 38
taxes that would have been payable i n the absence of this section are a lien on the real property 39
of the taxpayer as provided in G.S. 105 -355(a). The difference in taxes must be carried forward 40
in the records of each taxing unit as deferred taxes. The deferred taxes for the preceding three 41
fiscal years are due and payable in accordance with G.S. 105-277.1F when the property loses its 42
eligibility for deferral as a result of a disqualifying event described in subsection (i) of this 43
section. On or before September 1 of each year, the collector must send to the mailing address of 44
a residence on which taxes have been deferred a notice stating the amount of deferred taxes and 45
interest that would be due and payable upon the occurrence of a disqualifying event. 46
(i) Disqualifying Events. – A property receiving the benefit under this section loses its 47
eligibility for the benefit as a result of a disqualifying event. The tax for the fiscal year that begins 48
in the calendar year in which the disqualifying event occurs is computed as if the property had 49
not been classified for the property tax benefit under this section for that year. Each of the 50
following constitutes a disqualifying event: 51
General Assembly Of North Carolina Session 2025
House Bill 59-Second Edition Page 3
(1) The owner transfers the residence. Transfer of the residence is not a 1
disqualifying event if (i) the owner transfers the residence to a co -owner of 2
the residence or, as part of a divorce proceeding, to his or her spouse and (ii) 3
that individual occupies or continues to occupy the property as his or her 4
permanent residence. 5
(2) The owner dies. Death of the owner is not a disqualifying event if (i) the 6
owner's share passes to a co-owner of the residence or to his or her spouse and 7
(ii) that individual occupies or continues to occupy the property as his or her 8
permanent residence. 9
(3) The owner ceases to use the property as a permanent residence. 10
(j) Gap in Deferral. – If an owner of a residence on which taxes have been deferred under 11
this section is not eligible for continued deferral for a tax year, the deferred taxes are carried 12
forward and are not due and payable until a disqualifying event occurs. If the owner of the 13
residence qualifies for deferral after one or more years in which he or she did not qualify for 14
deferral and a disqualifying event occurs, the years in which the owner did not qualify are 15
disregarded in dete rmining the preceding three years for which the deferred taxes are due and 16
payable. 17
(k) Repealed by Session Laws 2008-35, s. 1.2, effective July 1, 2008. 18
(l) Creditor Limitations. – A mortgagee or trustee that elects to pay any tax deferred by 19
the owner of a residence subject to a mortgage or deed of trust does not acquire a right to foreclose 20
as a result of the election. Except for requirements dictated by federal law or regulation, any 21
provision in a mortgage, deed of trust, or other agreement that prohibits the owner from deferring 22
taxes on property under this section is void. 23
(m) Construction. – This section does not affect the attachment of a lien for personal 24
property taxes against a tax-deferred residence. 25
(n) Application. – An application for property tax relief provided by this section should 26
be filed during the regular listing period, but may be filed and must be accepted at any time up 27
to and through June 1 preceding the tax year for which the relief is claimed. Persons may apply 28
for this property tax relief by entering the appropriate information on a form made available by 29
the assessor under G.S. 105-282.1." 30
SECTION 1.(c) G.S. 105-282.1(a) is amended by adding a new subdivision to read: 31
"(3) Triennial application required. – An owner of a property eligible for the 32
property tax homestead circuit breaker under G.S. 105-277.1B must file an 33
application for the benefit to receive it. Once the application has been 34
approved, the owner is entitled to the benefit for the current tax year and the 35
two subsequent tax years thereafter unless the property loses its eligibility for 36
the benefit as a result of a disqualifying event under G.S. 105-277.1B(i)." 37
SECTION 1.(d) G.S. 105-277.1F(a)(2) is repealed. 38
SECTION 1.(e) G.S. 105-365.1(a)(3) is repealed. 39
SECTION 1.(f) G.S. 153A-148.1 reads as rewritten: 40
"§ 153A-148.1. Disclosure of certain information prohibited. 41
(a) Disclosure Prohibited. – Notwithstanding Chapter 132 of the General Statutes or any 42
other law regarding access to public records, local tax records that contain information about a 43
taxpayer's income or receipts are not public records. A current or former officer, employee, or 44
agent of a county who in the course of service to or employment by the county has access to 45
information about the amount of a taxpayer's income or receipts may not disclose the information 46
to any other person unless the disclosure is made for one of the following purposes: 47
… 48
(6) To include on a property tax receipt the amount of property taxes due and the 49
amount of property taxes deferred on a residence classified under 50
G.S. 105-277.1B, the property tax homestead circuit breaker. 51
General Assembly Of North Carolina Session 2025
Page 4 House Bill 59-Second Edition
…." 1
SECTION 1.(g) G.S. 160A-208.1 reads as rewritten: 2
"§ 160A-208.1. Disclosure of certain information prohibited. 3
(a) Disclosure Prohibited. – Notwithstanding Chapter 132 of the General Statutes or any 4
other law regarding access to public records, local tax records that contain information about a 5
taxpayer's income or receipts are not public records. A current or former o fficer, employee, or 6
agent of a city who in the course of service to or employment by the city has access to information 7
about the amount of a taxpayer's income or receipts may not disclose the information to any other 8
person unless the disclosure is made for one of the following purposes: 9
… 10
(4) To include on a property tax receipt the amount of property taxes due and the 11
amount of property taxes deferred on a residence classified under 12
G.S. 105-277.1B, the property tax homestead circuit breaker. 13
…." 14
SECTION 2. Notwithstanding G.S. 105-380 and G.S. 105-381, the governing body 15
of a taxing unit shall release the unpaid deferred taxes under G.S. 105-277.1B on any property 16
for which a disqualifying event has not occurred. Any lien under G.S. 105-355(a) corresponding 17
to the released deferred taxes is also extinguished. 18
SECTION 3. Section 1 of this act is effective for taxable years beginning on or after 19
July 1, 2026. The remainder of this act is effective July 1, 2026. 20