North Carolina HB 1042: Increase In-Service Death Benefit/LRS.

Bill Text

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 3
HOUSE BILL 1042
Committee Substitute Favorable 5/12/26
Committee Substitute #2 Favorable 5/19/26

Short Title: Affordable Housing Exemption Mods. (Public)
Sponsors:
Referred to:
April 27, 2026
*H1042-v-3*
A BILL TO BE ENTITLED 1
AN ACT TO UPDATE AND MODIFY THE NONPROFIT LOW- OR MODERATE-INCOME 2
HOUSING PROPERTY TAX EXEMPTION. 3
The General Assembly of North Carolina enacts: 4
SECTION 1. G.S. 105-278.6 reads as rewritten: 5
"§ 105-278.6. Real and personal property used for charitable purposes.purposes by certain 6
entities. 7
(a) Real and personal property owned by:by an entity listed in this subsection is exempt 8
from taxation if (i) as to real property, it is actually and exclusively occupied and used and, as to 9
personal property, it is entirely and completely used by the owner for a charitable purpose; and 10
(ii) the owner is not organized or operated for profit. The entities are: 11
(1) A Young Men's Christian Association or similar organization;organization. 12
(2) A home for the aged, sick, or infirm;infirm. 13
(3) An orphanage or similar home;home. 14
(4) A Society for the Prevention of Cruelty to Animals;Animals. 15
(5) A reformatory or correctional institution;institution. 16
(6) A monastery, convent, or nunnery;nunnery. 17
(7) A nonprofit, life-saving, first aid, or rescue squad organization;organization. 18
(8) A nonprofit organization providing housing for individuals or families with 19
low or moderate incomesincomes, other than rental housing. This subdivision 20
does not apply to rental housing, which must qualify under G.S. 105-278.7A 21
to be eligible for an exemption. 22
shall be exempted from taxation if: (i) As to real property, it is actually and exclusively occupied 23
and used, and as to personal property, it is entirely and completely used, by the owner for 24
charitable purposes; and (ii) the owner is not organized or operated for profit. 25
(b) A charitable purpose within the meaning of this section is one that has humane and 26
philanthropic objectives; it is an activity that benefits humanity or a significant rather than limited 27
segment of the community without expectation of pecuniary profit or reward. The humane 28
treatment of animals is also a charitable purpose. 29
(c) The fact that a building or facility is incidentally available to and patronized by the 30
general public, so long as there is no material amount of business or patronage with the general 31
public, shall does not defeat the exemption granted by this section. 32
(d) Notwithstanding the exclusive-use exclusive use requirements of this section, if part 33
of a property that otherwise meets the section's requirements is used for a purpose that would 34

General Assembly Of North Carolina Session 2025
Page 2 House Bill 1042-Third Edition
require exemption under subsection (a), above, if the entire property were so used, the valuation 1
of the part so used shall be exempted is exempt from taxation. 2
(e) Real property held by an organization described in subdivision (a)(8) for a charitable 3
purpose under this section as a future site for housing housing, other than affordable rental 4
housing as defined in G.S. 105-278.7A, for individuals or families with low or moderate incomes 5
may be classified under this section for no more than 10 five years. The taxes that would 6
otherwise be due on real property exempt under this subsection shall be are a lien on the property 7
as provided in G.S. 105-355(a). The taxes shall be are carried forward in the records of the taxing 8
unit as deferred taxes. The deferred taxes are due and payable in accordance with 9
G.S. 105-277.1F when the property loses its eligibility for deferral as a result of a disqualifying 10
event. A disqualifying event occurs when the property was is not used for low- or 11
moderate-income housing within 10 five years from the first day of the fiscal year the property 12
was classified under this subsection. In addition to the provisions in G.S. 105-277.1F, all liens 13
arising under this subdivision are extinguished when the property is used for low- or 14
moderate-income housing within the time period allowed under this subsection." 15
SECTION 2. Article 12 of Chapter 105 of the General Statutes is amended by adding 16
the following new section to read: 17
"§ 105-278.7A. Real and personal property owned, in whole or in part, by a charitable 18
nonprofit and used for affordable rental housing. 19
(a) Exemption Generally. – Real and personal property owned by an eligible owner and 20
used for a charitable purpose in the operation of affordable rental housing is exempt from taxation 21
to the extent provided in this section if the requirements of this section are met. 22
(b) Definitions. – The following definitions apply in this section: 23
(1) Affiliate. – Defined in G.S. 105-130.2. 24
(2) Affordable rental housing. – A rental housing development consisting of land 25
and improvements in which