Section 1 adds a new Article 3M to GS Chapter 105 establishing affordable housing tax credits.

New GS 105-129.120 authorizes a credit against income tax or gross premium tax for qualified North Carolina affordable housing in an amount equal to the amount of the federal affordable housing tax credit claimed.  The amount of credit is limited to no more than 50% of the tax against which the credit is claimed, including carryforwards, and unused portions of the credit may be carried forward in subsequent tax years.  Pass-through entities may allocate the credit among their owners in their discretion.  Defines qualified North Carolina housing for purposes of the tax credit as being housing for which the federal credit is allowable and which is used for either senior and disabled housing, at least 50% of the financing for the housing is by federally tax-exempt bonds, or the building is located in a area subject to a presidential major disaster declaration. Recapture of all or part of the federal credit must be reported to the Secretary of Revenue and results in forfeiture of the corresponding state tax credit as well as liability for past taxes avoided under the forfeited credit.

New GS 105-129.121 requires the taxpayer to maintain and make available information and records required by the Secretary of Revenue and places the burden of proving eligibility for the credit on the taxpayer.

New GS 105-129.122 establishes reporting requirements for the Secretary.

Effective for tax years beginning January 1, 2018.