Excise Tax, Property Taxes & Association Insurance

The Taxes/Insurance area is small, but it is the one place on the State section where you are almost guaranteed a calculation: North Carolina's excise tax on deeds. The other questions draw on how county property taxes work, which is why they show up on every closing statement, and on the insurance rules that apply to condominiums and planned communities.

The excise tax on conveyances

N.C.G.S. § 105-228.30 levies an excise tax on each instrument that conveys an interest in real property. The rules to memorize:

• Rate: $1.00 on each $500 or fractional part of the consideration or value conveyed. That works out to $2 per $1,000, but always round up to the next whole $500.
• Who pays: the transferor (the seller or grantor).
• To whom and when: to the register of deeds of the county where the property is located, before the deed is recorded.
• Two counties: pay in the county where the greater part of the property, measured by value, lies.

Where the money goes. The county keeps one-half for its general fund and sends the other half, less refunds and an administrative allowance, to the Department of Revenue (§ 105-228.30(b)).

Exempt transfers. Under § 105-228.29 the tax does not apply to transfers by operation of law, by a lease for a term of years, by will or intestacy, by gift, where no consideration is paid, by merger or conversion, or by an instrument securing indebtedness. That last one means a buyer's deed of trust to the lender carries no excise tax. Only the deed from seller to buyer does.

County property (ad valorem) taxes

• Listing date. All taxable property is listed annually, and ownership of real property is determined as of January 1 (§ 105-285).
• Valuation. Property is appraised at its true value, which the statute defines as market value: the price between a willing, financially able buyer and a willing seller, neither under compulsion (§ 105-283).
• Reappraisal. Each county must reappraise all real property at least every eighth year, and may advance that date (§ 105-286(a)).
• Lien. The tax lien on a parcel attaches on the listing date, January 1, regardless of when the amount is actually determined (§ 105-355(a)).
• Due date. Taxes are due September 1 and may be paid without interest before January 6. Interest is 2% for January 6 to February 1, then 3/4% per month (§ 105-360(a)).

Why this matters at closing. Because the lien attaches January 1 but the bill isn't due until September 1, nearly every sale closes with current-year taxes unpaid or only recently paid. That is why a compliant NC offer form must state that title will be free of encumbrances except ad valorem taxes for the current year (among others). It must also list the items to be prorated or adjusted at closing (Rule 58A .0112(a)(12)-(13)).

The elderly or disabled homestead exclusion

Section 105-277.1 excludes part of the value of a permanent residence from taxation for a qualifying owner. The exclusion is the greater of $25,000 or 50% of the appraised value. To qualify, as of January 1 the owner must be at least 65 or totally and permanently disabled, have income for the preceding calendar year of not more than the annually adjusted income eligibility limit, and be a North Carolina resident.

Insurance in condominiums and planned communities

For condominiums governed by the Condominium Act and planned communities governed by the Planned Community Act, the statutes require the association to carry insurance, starting no later than the first sale of a unit or lot to someone other than the declarant:

• Property insurance on the common elements against fire and extended-coverage perils, of at least 80% of replacement cost.
• Liability insurance in reasonable amounts for injury and property damage connected with the common elements.

Both the Condominium Act (§ 47C-3-113) and the Planned Community Act (§ 47F-3-113) contain this requirement, to the extent the coverage is available. If it isn't reasonably available, the association must promptly notify the owners.

Flood information. The Commission's Residential Property and Owners' Association Disclosure Statement asks whether the property is in a Special Flood Hazard Area, has a flood elevation certificate, is insured for flood damage, or has had a flood claim or federal flood assistance (Rule 58A .0114(a)(11)). Brokers should make sure buyers read those answers carefully.

Excise tax

The NC tax on a deed, $1 per $500 or fraction of value, paid by the transferor to the register of deeds.

Ad valorem tax

A tax "according to value," meaning the annual county or city property tax.

True value

Market value under § 105-283, the standard for property tax appraisal.

Where this shows up on the exam

Taxes/Insurance is 4 of the 60 scored State items in the Pearson NC outline (April 2026). Plan on one excise tax calculation (remember to round up to the next $500), plus questions on who pays it, the January 1 lien, the September 1 due date, or association insurance.

Sources

North Carolina law as published by the General Assembly and the Office of Administrative Hearings, checked 2026-11-05:

• 21 NCAC 58A .0112(a)(12)
• 21 NCAC 58A .0112(a)(13)
• 21 NCAC 58A .0114(a)(11)
• N.C.G.S. § 105-228.29
• N.C.G.S. § 105-228.30(a)
• N.C.G.S. § 105-228.30(b)
• N.C.G.S. § 105-277.1(a)
• N.C.G.S. § 105-283
• N.C.G.S. § 105-285(a)
• N.C.G.S. § 105-285(d)
• N.C.G.S. § 105-286(a)
• N.C.G.S. § 105-355(a)
• N.C.G.S. § 105-360(a)
• N.C.G.S. § 105-360(a)(2)
• N.C.G.S. § 47C-3-113(a)
• N.C.G.S. § 47C-3-113(a)(2)
• N.C.G.S. § 47F-3-113(a)
• N.C.G.S. § 47F-3-113(b)
• Pearson VUE, Real Estate Licensing in North Carolina (April 2026), Examination Content Outline