Where SAHA stands on exemption reform
The nonprofit affordable housing property tax exemption needs stronger guardrails. SAHA supports reform that ties the exemption to verified, enforceable affordability, and has submitted specific statutory language to that effect.
An exemption that cannot be audited is an exemption that cannot be defended. The reforms below raise the compliance standard rather than narrow who qualifies.
North Carolina's nonprofit low- and moderate-income housing exemption is codified at G.S. 105-278.6. House Bill 1042 (2025–2026 Session) would restructure it and add a new section, proposed G.S. 105-278.7A, governing affordable rental housing. The provisions below refer to SAHA's proposed revisions to that new section.
Four standards we proposed in statute
Monthly compliance reporting
Rent roll and income verification filed monthly, with express audit authority granted to the county and municipality. Counties have said they lack capacity to audit. This closes that gap at the owner's expense.
Proposed G.S. 105-278.7A(h)
Enforceable 15-year affordability
A recorded deed restriction running to the county and municipality, enforceable by them, requiring the property operate as affordable rental housing for no less than fifteen years.
Proposed G.S. 105-278.7A(c)(2)b. and (d)(5)
A track record requirement
Five years of operating affordable rental housing before qualifying. An entity formed weeks before an application deadline would not qualify.
Proposed G.S. 105-278.7A(d)(1)
A federal affordability standard
North Carolina could measure affordability against the federal safe harbor in Revenue Procedure 96-32, the same standard applied in South Carolina. It requires deeper affordability than House Bill 1042 as introduced, and because it is defined and administered federally, it cannot be drafted loosely or read differently from one county to the next. SAHA's partner properties generally operate at 50 to 60 percent of area median income — well below North Carolina's current 80 percent threshold. That track record means North Carolina could adopt a sub-80-percent standard without disrupting compliant, mission-driven housing.
Rev. Proc. 96-32, §3
A bill that did not distinguish between operators
House Bill 1042 as introduced would have removed the exemption from properties meeting their affordability obligations alongside those that are not. It set no reporting standard by which a county could tell the difference.
SAHA opposed that version and proposed an alternative: a higher, verifiable compliance standard applied to every owner claiming the exemption.
SAHA submitted proposed statutory revisions to the bill's sponsors in April 2026, at a sponsor's request, through its North Carolina counsel. The provisions above are drawn from that submission. SAHA's account of the bill's progress through the 2026 session is set out in Holding the Line in Raleigh, published July 13, 2026.
Bill text and legislative history: House Bill 1042, North Carolina General Assembly, 2025–2026 Session.