North Carolina 2025-2026 Regular Session

North Carolina House Bill H467 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1	1		GENERAL ASSEMBLY OF NORTH CAROLINA
2	2		SESSION 2025
3		-	H 1
4		-	HOUSE BILL 467
	3	+	H D
	4	+	HOUSE BILL DRH10231-MCf-171
	5	+
5	6
6	7
7	8		Short Title: Reenact Low-Income Housing Tax Credits. (Public)
8		-	Sponsors: Representatives Greenfield, A. Jones, T. Brown, and Crawford (Primary
9		-	Sponsors).
10		-	For a complete list of sponsors, refer to the North Carolina General Assembly web site.
11		-	Referred to: Rules, Calendar, and Operations of the House
12		-	March 24, 2025
13		-	H467 -v-1
	9	+	Sponsors: Representative Greenfield.
	10	+	Referred to:
	11	+
	12	+	DRH10231 -MCf-171
14	13		A BILL TO BE ENTITLED 1
15	14		AN ACT TO REENACT THE LOW -INCOME HOUSING TAX CREDITS. 2
16	15		The General Assembly of North Carolina enacts: 3
17	16		SECTION 1. Article 3E of Chapter 105 of the General Statutes, with the exception 4
18	17		of G.S. 105-129.41, is reenacted as it existed immediately before its repeal and reads as rewritten: 5
19	18		"Article 3E. 6
20	19		"Low-Income Housing Tax Credits. 7
21	20		"§ 105-129.40. Scope and definitions.Definitions. 8
22	21		(a) Scope. – G.S. 105-129.41 applies to buildings that are awarded a federal credit 9
23	22		allocation before January 1, 2003. G.S. 105-129.42 applies to buildings that are awarded a federal 10
24	23		credit allocation on or after January 1, 2003. 11
25	24		(b) Definitions. – The definitions in section 42 of the Code and the following definitions 12
26	25		apply in this Article: 13
27	26		(1) Housing Finance Agency. – The North Carolina Housing Finance Agency 14
28	27		established in G.S. 122A-4. 15
29	28		(2) Pass-through entity. – Defined in G.S. 105-228.90. 16
30	29		"§ 105-129.42. Credit for low-income housing awarded a federal credit allocation on or 17
31	30		after January 1, 2003.allocation. 18
32	31		(a) Definitions. – The following definitions apply in this section: 19
33	32		(1) Qualified Allocation Plan. – The plan governing the allocation of federal 20
34	33		low-income housing tax credits for a particular year, as approved by the 21
35	34		Governor after a public hearing and publication in the North Carolina 22
36	35		Register. 23
37	36		(2) Qualified North Carolina low-income housing development. – A qualified 24
38	37		low-income project or building that is allocated a federal tax credit under 25
39	38		section 42(h)(1) of the Code and is described in subsection (c) of this section. 26
40	39		(3) Qualified residential unit. – A housing unit that meets the requirements of 27
41	40		section 42 of the Code. 28
42	41		(b) Credit. – A taxpayer who is allocated a federal low-income housing tax credit under 29
43	42		section 42 of the Code to construct or substantially rehabilitate a qualified North Carolina 30
44	43		low-income housing development is allowed a credit equal to a percentage of the development's 31
45	44		qualified basis, as determined pursuant to section 42 of the Code. For the purpose of this section, 32
46		-	qualified basis is calculated based on the information contained in the carryover allocation and 33 General Assembly Of North Carolina Session 2025
47		-	Page 2 House Bill 467-First Edition
48		-	is not recalculated to reflect subsequent increases or decreases. No credit is allowed for a 1
49		-	development that uses tax-exempt bond financing. 2
50		-	(c) Developments and Amounts. – The following table sets out the housing developments 3
51		-	that are qualified North Carolina low-income housing developments and are allowed a credit 4
52		-	under this section. The table also sets out the percentage of the development's qualified basis for 5
53		-	which a credit is allowed. The designation of a county or city as Low Income, Moderate Income, 6
54		-	or High Income and determinations of affordability are made by the Housing Finance Agency in 7
55		-	accordance with the Qualified Allocation Plan in effect as of the time the federal credit is 8
56		-	allocated. A change in the income designation of a county or city after a federal credit is allocated 9
57		-	does not affect the percentage of the developer's qualified basis for which a credit is allowed. The 10
58		-	affordability requirements set out in the chart apply for the duration of the federal tax credit 11
59		-	compliance period. If in any year a taxpayer fails to meet these affordability requirements, the 12
60		-	credit is forfeited under subsection (h) of this section. 13
61		-	Percentage of 14
62		-	Basis for 15
63		-	Type of Development Which Credit 16
64		-	is Allowed 17
65		-	Forty percent (40%) of the qualified residential units 18
66		-	are affordable to households whose income is fifty Thirty percent 19
67		-	percent (50%) or less of area median income and the (30%) 20
68		-	units are in a Low-Income county or city. 21
69		-	22
70		-	Fifty percent (50%) of the qualified residential units 23
71		-	are affordable to households whose income is fifty Twenty percent 24
72		-	percent (50%) or less of the area median income and (20%) 25
73		-	the units are in a Moderate-Income county or city. 26
74		-	27
75		-	Fifty percent (50%) of the qualified residential units 28
76		-	are affordable to households whose income is forty Ten percent 29
77		-	percent (40%) or less of the area median income and (10%) 30
78		-	the units are in a High-Income county or city. 31
79		-	32
80		-	Twenty-five percent (25%) of the qualified residential 33
81		-	units are affordable to households whose income is Ten percent 34
82		-	thirty percent (30%) or less of the area median income (10%) 35
83		-	and the units are in a High-Income county or city. 36
84		-	37
85		-	(d) Election. – When a taxpayer to whom a federal low-income housing credit is allocated 38
86		-	submits to the Housing Finance Agency a request to receive a carryover allocation for that credit, 39
87		-	the taxpayer must elect a method for receiving the tax credit allowed by this section. A taxpayer 40
88		-	may elect to receive the credit in the form of either a direct tax refund or a loan generated by 41
89		-	transferring the credit to the Housing Finance Agency. Neither a direct tax refund nor a loan 42
90		-	received as the result of the transfer of the credit is considered taxable income under this Chapter. 43
91		-	Under the direct tax refund method, a taxpayer elects to apply the credit allowed by this 44
92		-	section to the taxpayer's liability under Article 4 of this Chapter. If the credit allowed by this 45
93		-	section exceeds the amount of tax imposed by Article 4 for the taxable year, reduced by the sum 46
94		-	of all other credits allowable, the Secretary must refund the excess. In computing the amount of 47
95		-	tax against which multiple credits are allowed, nonrefundable credits are subtracted before this 48
96		-	credit. The provisions that apply to an overpayment of tax apply to the refundable excess of a 49
97		-	credit allowed under this section. 50 General Assembly Of North Carolina Session 2025
98		-	House Bill 467-First Edition Page 3
99		-	Under the loan method, a taxpayer elects to transfer the credit allowed by this section to the 1
100		-	Housing Finance Agency and receive a loan from that Agency for the amount of the credit. The 2
101		-	terms of the loan are specified by the Housing Finance Agency in accordance with the Qualified 3
102		-	Allocation Plan. 4
103		-	(e) Exception When No Carryover. – If a taxpayer does not submit to the Housing 5
104		-	Finance Agency a request to receive a carryover allocation, the taxpayer must elect the method 6
105		-	for receiving the credit allowed by this section when the taxpayer submits to the Agency federal 7
106		-	Form 8609. A taxpayer to whom this subsection applies claims the credit for the taxable year in 8
107		-	which the taxpayer submits federal Form 8609. 9
108		-	(f) Pass-Through Entity. – Notwithstanding the provisions of G.S. 105-131.8 and 10
109		-	G.S. 105-269.15, a pass-through entity that qualifies for the credit provided in this Article does 11
110		-	not distribute the credit among any of its owners. The pass-through entity is considered the 12
111		-	taxpayer for purposes of claiming the credit allowed by this Article. If a return filed by a 13
112		-	pass-through entity indicates that the entity is paying tax on behalf of the owners of the entity, 14
113		-	the credit allowed under this Article does not affect the entity's payment of tax on behalf of its 15
114		-	owners. 16
115		-	(g) Return and Payment. – A taxpayer may claim the credit allowed by this section on a 17
116		-	return filed for the taxable year in which the taxpayer receives a carryover allocation of a federal 18
117		-	low-income housing credit. The return must state the name and location of the qualified 19
118		-	low-income housing development for which the credit is claimed. 20
119		-	If a taxpayer chooses the loan method for receiving the credit allowed under this section, the 21
120		-	Secretary must transfer to the Housing Finance Agency the amount of credit allowed the 22
121		-	taxpayer. The Agency must loan the taxpayer the amount of the credit on terms consistent with 23
122		-	the Qualified Allocation Plan. The Housing Finance Agency is not required to make a loan to a 24
123		-	qualified North Carolina low-income housing development until the Secretary transfers the credit 25
124		-	amount to the Agency. 26
125		-	If the taxpayer chooses the direct tax refund method for receiving the credit allowed under 27
126		-	this section, the Secretary must transfer to the Housing Finance Agency the refundable excess of 28
127		-	the credit allowed the taxpayer. The Agency holds the refund due the taxpayer in escrow, with 29
128		-	no interest accruing to the taxpayer during the escrow period. The Agency must release the refund 30
129		-	to the taxpayer upon the occurrence of the earlier of the following: 31
130		-	(1) The Agency determines that the taxpayer has complied with the Qualified 32
131		-	Allocation Plan and has completed at least fifty percent (50%) of the activities 33
132		-	included in the development's qualified basis. 34
133		-	(2) Within 30 days after the date the development is placed in service. 35
134		-	(h) Forfeiture. – A taxpayer that receives a credit under this section must immediately 36
135		-	report any recapture event under section 42 of the Code to the Housing Finance Agency. If the 37
136		-	taxpayer or any of its owners are required under section 42(j) of the Code to recapture all or part 38
137		-	of a federal credit with respect to a qualified North Carolina low-income development, the 39
138		-	taxpayer forfeits the corresponding part of the credit allowed under this section. This requirement 40
139		-	does not apply in the following circumstances: 41
140		-	(1) When the recapture of part or all of the federal credit is the result of an event 42
141		-	that occurs in the sixth or a subsequent calendar year after the calendar year 43
142		-	in which the development was awarded a federal credit allocation. 44
143		-	(2) The taxpayer elected to transfer the credit allowed by this section to the 45
144		-	Housing Finance Agency. 46
145		-	(i) Liability From Forfeiture. – A taxpayer that forfeits all or part of the credit allowed 47
146		-	under this section is liable for all past taxes avoided and any refund claimed as a result of the 48
147		-	credit plus interest at the rate established under G.S. 105-241.21. The interest is computed from 49
148		-	the date the Secretary transferred the credit amount to the Housing Finance Agency. The past 50
149		-	taxes, refund, and interest are due 30 days after the date the credit is forfeited. A taxpayer that 51 General Assembly Of North Carolina Session 2025
150		-	Page 4 House Bill 467-First Edition
151		-	fails to pay the taxes, refund, and interest by the due date is subject to the penalties provided in 1
152		-	G.S. 105-236. 2
153		-	"§ 105-129.43. Substantiation. 3
154		-	A taxpayer allowed a credit under this Article must maintain and make available for 4
155		-	inspection any information or records required by the Secretary of Revenue or the Housing 5
156		-	Finance Agency. The burden of proving eligibility for a credit and the amount of the credit rests 6
157		-	upon the taxpayer. 7
158		-	"§ 105-129.44. Report. 8
159		-	The Department must include in the economic incentives report required by G.S. 105-256 the 9
160		-	following information itemized by taxpayer: 10
161		-	(1) The number of taxpayers that took the credit allowed in this Article. 11
162		-	(2) The location of each qualified North Carolina low-income building or housing 12
163		-	development for which a credit was taken. 13
164		-	(3) The total cost to the General Fund of the credits taken. 14
165		-	"§ 105-129.45. Sunset. 15
166		-	This Article is repealed effective January 1, 2015. 2030. The repeal applies to developments 16
167		-	to which federal credits are allocated on or after January 1, 2015.2030." 17
168		-	SECTION 2. This act is effective for taxable years beginning on or after January 1, 18
169		-	2025, and applies to allocations of federal low-income housing tax credits on or after that date. 19
	45	+	qualified basis is calculated based on the information contained in the carryover allocation and 33
	46	+	is not recalculated to reflect subsequent increases or decreases. No credit is allowed for a 34
	47	+	development that uses tax-exempt bond financing. 35
	48	+	H.B. 467
	49	+	Mar 20, 2025
	50	+	HOUSE PRINCIPAL CLERK General Assembly Of North Carolina Session 2025
	51	+	Page 2 DRH10231-MCf-171
	52	+	(c) Developments and Amounts. – The following table sets out the housing developments 1
	53	+	that are qualified North Carolina low-income housing developments and are allowed a credit 2
	54	+	under this section. The table also sets out the percentage of the development's qualified basis for 3
	55	+	which a credit is allowed. The designation of a county or city as Low Income, Moderate Income, 4
	56	+	or High Income and determinations of affordability are made by the Housing Finance Agency in 5
	57	+	accordance with the Qualified Allocation Plan in effect as of the time the federal credit is 6
	58	+	allocated. A change in the income designation of a county or city after a federal credit is allocated 7
	59	+	does not affect the percentage of the developer's qualified basis for which a credit is allowed. The 8
	60	+	affordability requirements set out in the chart apply for the duration of the federal tax credit 9
	61	+	compliance period. If in any year a taxpayer fails to meet these affordability requirements, the 10
	62	+	credit is forfeited under subsection (h) of this section. 11
	63	+	Percentage of 12
	64	+	Basis for 13
	65	+	Type of Development Which Credit 14
	66	+	is Allowed 15
	67	+	Forty percent (40%) of the qualified residential units 16
	68	+	are affordable to households whose income is fifty Thirty percent 17
	69	+	percent (50%) or less of area median income and the (30%) 18
	70	+	units are in a Low-Income county or city. 19
	71	+	20
	72	+	Fifty percent (50%) of the qualified residential units 21
	73	+	are affordable to households whose income is fifty Twenty percent 22
	74	+	percent (50%) or less of the area median income and (20%) 23
	75	+	the units are in a Moderate-Income county or city. 24
	76	+	25
	77	+	Fifty percent (50%) of the qualified residential units 26
	78	+	are affordable to households whose income is forty Ten percent 27
	79	+	percent (40%) or less of the area median income and (10%) 28
	80	+	the units are in a High-Income county or city. 29
	81	+	30
	82	+	Twenty-five percent (25%) of the qualified residential 31
	83	+	units are affordable to households whose income is Ten percent 32
	84	+	thirty percent (30%) or less of the area median income (10%) 33
	85	+	and the units are in a High-Income county or city. 34
	86	+	35
	87	+	(d) Election. – When a taxpayer to whom a federal low-income housing credit is allocated 36
	88	+	submits to the Housing Finance Agency a request to receive a carryover allocation for that credit, 37
	89	+	the taxpayer must elect a method for receiving the tax credit allowed by this section. A taxpayer 38
	90	+	may elect to receive the credit in the form of either a direct tax refund or a loan generated by 39
	91	+	transferring the credit to the Housing Finance Agency. Neither a direct tax refund nor a loan 40
	92	+	received as the result of the transfer of the credit is considered taxable income under this Chapter. 41
	93	+	Under the direct tax refund method, a taxpayer elects to apply the credit allowed by this 42
	94	+	section to the taxpayer's liability under Article 4 of this Chapter. If the credit allowed by this 43
	95	+	section exceeds the amount of tax imposed by Article 4 for the taxable year, reduced by the sum 44
	96	+	of all other credits allowable, the Secretary must refund the excess. In computing the amount of 45
	97	+	tax against which multiple credits are allowed, nonrefundable credits are subtracted before this 46
	98	+	credit. The provisions that apply to an overpayment of tax apply to the refundable excess of a 47
	99	+	credit allowed under this section. 48
	100	+	Under the loan method, a taxpayer elects to transfer the credit allowed by this section to the 49
	101	+	Housing Finance Agency and receive a loan from that Agency for the amount of the credit. The 50 General Assembly Of North Carolina Session 2025
	102	+	DRH10231-MCf-171 Page 3
	103	+	terms of the loan are specified by the Housing Finance Agency in accordance with the Qualified 1
	104	+	Allocation Plan. 2
	105	+	(e) Exception When No Carryover. – If a taxpayer does not submit to the Housing 3
	106	+	Finance Agency a request to receive a carryover allocation, the taxpayer must elect the method 4
	107	+	for receiving the credit allowed by this section when the taxpayer submits to the Agency federal 5
	108	+	Form 8609. A taxpayer to whom this subsection applies claims the credit for the taxable year in 6
	109	+	which the taxpayer submits federal Form 8609. 7
	110	+	(f) Pass-Through Entity. – Notwithstanding the provisions of G.S. 105-131.8 and 8
	111	+	G.S. 105-269.15, a pass-through entity that qualifies for the credit provided in this Article does 9
	112	+	not distribute the credit among any of its owners. The pass-through entity is considered the 10
	113	+	taxpayer for purposes of claiming the credit allowed by this Article. If a return filed by a 11
	114	+	pass-through entity indicates that the entity is paying tax on behalf of the owners of the entity, 12
	115	+	the credit allowed under this Article does not affect the entity's payment of tax on behalf of its 13
	116	+	owners. 14
	117	+	(g) Return and Payment. – A taxpayer may claim the credit allowed by this section on a 15
	118	+	return filed for the taxable year in which the taxpayer receives a carryover allocation of a federal 16
	119	+	low-income housing credit. The return must state the name and location of the qualified 17
	120	+	low-income housing development for which the credit is claimed. 18
	121	+	If a taxpayer chooses the loan method for receiving the credit allowed under this section, the 19
	122	+	Secretary must transfer to the Housing Finance Agency the amount of credit allowed the 20
	123	+	taxpayer. The Agency must loan the taxpayer the amount of the credit on terms consistent with 21
	124	+	the Qualified Allocation Plan. The Housing Finance Agency is not required to make a loan to a 22
	125	+	qualified North Carolina low-income housing development until the Secretary transfers the credit 23
	126	+	amount to the Agency. 24
	127	+	If the taxpayer chooses the direct tax refund method for receiving the credit allowed under 25
	128	+	this section, the Secretary must transfer to the Housing Finance Agency the refundable excess of 26
	129	+	the credit allowed the taxpayer. The Agency holds the refund due the taxpayer in escrow, with 27
	130	+	no interest accruing to the taxpayer during the escrow period. The Agency must release the refund 28
	131	+	to the taxpayer upon the occurrence of the earlier of the following: 29
	132	+	(1) The Agency determines that the taxpayer has complied with the Qualified 30
	133	+	Allocation Plan and has completed at least fifty percent (50%) of the activities 31
	134	+	included in the development's qualified basis. 32
	135	+	(2) Within 30 days after the date the development is placed in service. 33
	136	+	(h) Forfeiture. – A taxpayer that receives a credit under this section must immediately 34
	137	+	report any recapture event under section 42 of the Code to the Housing Finance Agency. If the 35
	138	+	taxpayer or any of its owners are required under section 42(j) of the Code to recapture all or part 36
	139	+	of a federal credit with respect to a qualified North Carolina low-income development, the 37
	140	+	taxpayer forfeits the corresponding part of the credit allowed under this section. This requirement 38
	141	+	does not apply in the following circumstances: 39
	142	+	(1) When the recapture of part or all of the federal credit is the result of an event 40
	143	+	that occurs in the sixth or a subsequent calendar year after the calendar year 41
	144	+	in which the development was awarded a federal credit allocation. 42
	145	+	(2) The taxpayer elected to transfer the credit allowed by this section to the 43
	146	+	Housing Finance Agency. 44
	147	+	(i) Liability From Forfeiture. – A taxpayer that forfeits all or part of the credit allowed 45
	148	+	under this section is liable for all past taxes avoided and any refund claimed as a result of the 46
	149	+	credit plus interest at the rate established under G.S. 105-241.21. The interest is computed from 47
	150	+	the date the Secretary transferred the credit amount to the Housing Finance Agency. The past 48
	151	+	taxes, refund, and interest are due 30 days after the date the credit is forfeited. A taxpayer that 49
	152	+	fails to pay the taxes, refund, and interest by the due date is subject to the penalties provided in 50
	153	+	G.S. 105-236. 51 General Assembly Of North Carolina Session 2025
	154	+	Page 4 DRH10231-MCf-171
	155	+	"§ 105-129.43. Substantiation. 1
	156	+	A taxpayer allowed a credit under this Article must maintain and make available for 2
	157	+	inspection any information or records required by the Secretary of Revenue or the Housing 3
	158	+	Finance Agency. The burden of proving eligibility for a credit and the amount of the credit rests 4
	159	+	upon the taxpayer. 5
	160	+	"§ 105-129.44. Report. 6
	161	+	The Department must include in the economic incentives report required by G.S. 105-256 the 7
	162	+	following information itemized by taxpayer: 8
	163	+	(1) The number of taxpayers that took the credit allowed in this Article. 9
	164	+	(2) The location of each qualified North Carolina low-income building or housing 10
	165	+	development for which a credit was taken. 11
	166	+	(3) The total cost to the General Fund of the credits taken. 12
	167	+	"§ 105-129.45. Sunset. 13
	168	+	This Article is repealed effective January 1, 2015. 2030. The repeal applies to developments 14
	169	+	to which federal credits are allocated on or after January 1, 2015.2030." 15
	170	+	SECTION 2. This act is effective for taxable years beginning on or after January 1, 16
	171	+	2025, and applies to allocations of federal low-income housing tax credits on or after that date. 17