North Carolina Property Tax Reform Is Coming: Here Is What Multifamily Investors Need to Know

By Wesley Fricks

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Two pieces of legislation in Raleigh are worth your attention right now.

One has already passed the Senate. The other was filed a few weeks ago and would change how property taxes work in this state. Both will affect how multifamily deals get underwritten and priced in North Carolina.

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The Legislative Picture

Twelve North Carolina counties are revaluing in 2026. Multifamily prices across the state ran hard from 2020 to 2024, and counties on eight-year cycles have in many cases not moved their assessments since the prior cycle. Guilford is the most visible example. Preliminary residential value adjustments there are running 40 to 60 percent, which is what happens when a county defers revaluation through a period of sustained appreciation.

Senate Leader Phil Berger’s reappraisal moratorium, Senate Bill 889, cleared the Senate on May 6 after passing third reading. The bill would block most counties scheduled for 2026 reappraisals from applying their new values to property tax bills for the fiscal year starting in July. A floor amendment exempted Clay, Chowan, and Pamlico, narrowing the bill to nine counties. It now goes to the House and would still need Governor Stein’s signature to become law. Separately, House Republicans filed House Bill 1089 on April 30, a constitutional amendment that would direct the General Assembly to enact a statutory levy limit on property tax revenue growth. It needs three-fifths approval in both chambers to reach the ballot. If it gets there, voters decide on November 3. A March Carolina Journal poll found 73 percent of voters would support it.

The constitutional amendment is the bigger story. A levy limit caps how much revenue a county can collect from property taxes, which means counties can no longer hold rates flat to capture all the value when assessments rise. The interesting consequence for real estate investors is what it does to revaluation cycles. If you take away a county’s ability to use rates as a revenue tool, the only lever left is revaluing more often. Expect counties on eight-year cycles to shorten them. The catch-up adjustments showing up in Guilford right now — 40 to 60 percent on residential, lower on income-producing commercial — are a product of infrequent revaluations against a fast-moving market. A levy limit changes the incentive that produced them, but the transition between the old system and the new one is where the risk sits for anyone underwriting a deal in the next 18 months.

Impact to Underwriting

Twelve North Carolina counties are revaluing in 2026. Guilford is the headline name and the most useful illustration. The county is on a five-year cycle and last revalued in 2022, but the state triggered the 2026 revaluation a year early after a review found 2022 assessments were running roughly 20 percent below actual sales. Preliminary residential valuation increases there are coming in at 40 to 60 percent. That is four years of compounding appreciation arriving in a single bill, on a county that was not even behind schedule. Counties still sitting on eight-year cycles have a longer gap to close.

After a revaluation, commissioners have three choices: hold the rate flat and pass the full increase through, cut to revenue-neutral, or land somewhere between. We pulled the tax rate history for all twelve 2026 revaluation counties and measured what each one actually did at its last revaluation. Seven of twelve held flat or raised. Only three cut to anything resembling revenue-neutral. Guilford held its rate at .7305 without moving a penny at its last revaluation, which is the relevant precedent for what happens this cycle.

2026 Revaluation Counties: Rate Behavior at Last Revaluation

Source: NC Department of Revenue, county property tax rate schedules. Green = revenue-neutral or meaningful cut. Yellow = partial cut. Red = held flat or increased. *Exempted from SB 889 moratorium as currently drafted; revaluation proceeds as scheduled.

Take an actual 100-unit Greensboro property whose 2025 assessed value was $16,714,068 and whose 2025 combined tax bill came to $234,498. Guilford’s 2026 revaluation set the new value at $20,101,408, valued by income. If Guilford and Greensboro hold their combined 1.4030 rate flat, the new tax bill on this property is approximately $282,000. That is an increase of $47,500 annually, or $475 per unit per year. At a 5.5 cap rate, the value impact is $864,000, or roughly $8,600 per unit.

Before you commit to a deal, know which scenario your returns depend on. If it only works on revenue-neutral assumptions, you are underwriting to the optimistic case in a market where seven of twelve counties have historically chosen not to go there.

What to Watch

Two questions get answered in the next six months. Whether the House passes SB 889 and Governor Stein signs it tells you whether the moratorium becomes law and protects owners in the nine affected counties through the revaluation window. Whether voters ratify the constitutional amendment in November tells you whether the rules change permanently, or whether counties keep the full rate-setting discretion the table above shows they have historically used to their benefit.

Both answers shape how you underwrite acquisitions, price assets for sale, and think about the tax line. We will be publishing a follow-on piece on the nonprofit property tax exemption, which is a separate and equally significant story moving through the legislature right now. If any of this affects a specific asset or a transaction you are working on, reach out directly.

Contact

Wesley Fricks

[email protected]
(919) 746-9909