TAX CREDIT FOR CONVEYANCE OF PROPERTY

HB0186

HOUSE BILL 186

57th legislature - STATE OF NEW MEXICO - second session, 2026

INTRODUCED BY

Susan K. Herrera
and
Rebecca Dow

and
Roberto "Bobby" J. Gonzales

AN ACT

RELATING TO TAXATION; INCREASING THE AMOUNT OF CREDIT FOR THE
CONVEYANCE OF PROPERTY FOR CONSERVATION OR PRESERVATION
PURPOSES PURSUANT TO THE INCOME TAX ACT AND THE CORPORATE
INCOME AND FRANCHISE TAX ACT; PROVIDING FOR THE DETERMINATION
OF HOW MUCH OF THE CREDITS MAY BE CLAIMED BY TAXPAYERS WHO HAVE
AN OWNERSHIP INTEREST IN CERTAIN BUSINESS ENTITIES; MAKING THE
CREDITS REFUNDABLE.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1.
Section 7-2-18.10 NMSA 1978 (being Laws 2003,
Chapter 331, Section 7, as amended) is amended to read:

"7-2-18.10. TAX CREDIT--CERTAIN CONVEYANCES OF REAL
PROPERTY.--

A. There shall be allowed as a credit against the
tax liability imposed by the Income Tax Act, an amount equal to
[
fifty percent
]
the following percentages
of the fair market
value of land or interest in land that is conveyed for the
purpose of open space, natural resource or biodiversity
conservation, agricultural preservation or watershed or
historic preservation as an unconditional donation in
perpetuity by the landowner or taxpayer to a public or private
conservation agency eligible to hold the land and interests
therein for conservation or preservation purposes:

(1) fifty percent for land or an interest in
land conveyed prior to July 1, 2026; and

(2) eighty percent for land or an interest in
land conveyed on or after July 1, 2026.

B.
The fair market value of qualified donations
made pursuant to this section shall be substantiated by a
"qualified appraisal" prepared by a "qualified appraiser", as
those terms are defined under applicable federal laws and
regulations governing charitable contributions.

[
B.
]
C.
The amount of the credit that may be
claimed by a taxpayer shall not exceed:

(1)
one hundred thousand dollars ($100,000)
for a conveyance made prior to January 1, 2008; [
and shall not
exceed
]

(2)
two hundred fifty thousand dollars
($250,000) for a conveyance made on or after [
that date. In
addition, in a taxable year, the credit used may not exceed the
amount of individual income tax otherwise due. A portion of
the credit that is unused in a taxable year may be carried over
for a maximum of twenty consecutive taxable years following the
taxable year in which the credit originated until fully
expended. A taxpayer may claim only one tax credit per taxable
year
]
January 1, 2008 but prior to July 1, 2026; and

(3) two million dollars ($2,000,000) for a
conveyance made on or after July 1, 2026.

D. A taxpayer may only qualify for one tax credit
per taxable year. If multiple taxpayers are record owners of a
qualified donation, each taxpayer that is a record owner of the
qualified donation may claim a tax credit in proportion to that
taxpayer's ownership interest; provided that the total credit
claimed by all record owners shall not exceed the value that
would accrue if the qualified donation was made by a single
owner.

E. The total credit claimed by all members of a
partnership or limited liability company shall not exceed the
value that would accrue if the conveyance was made by a single
individual.

[
C.
]
F.
Qualified donations shall include the
conveyance in perpetuity of a fee interest in real property or
a less-than-fee interest in real property, such as a
conservation restriction, preservation restriction,
agricultural preservation restriction or watershed preservation
restriction, pursuant to the Land Use Easement Act and provided
that the less-than-fee interest qualifies as a charitable
contribution deduction under Section 170(h) of the Internal
Revenue Code. Dedications of land for open space for the
purpose of fulfilling density requirements to obtain
subdivision or building permits shall not be considered as
qualified donations pursuant to the Land Conservation
Incentives Act.
The portion of the tax credit that exceeds a
taxpayer's income tax liability in the taxable year in which
the credit is claimed shall be refunded to the taxpayer.

[
D.
]
G.
Qualified donations shall be eligible for
the tax credit if the donations are made to the state of New
Mexico, a political subdivision thereof or a charitable
organization described in Section 501(c)(3) of the Internal
Revenue Code and that meets the requirements of Section
170(h)(3) of that code.

[
E.
]
H.
To be eligible for treatment as qualified
donations under this section, land or interests in lands must
be certified by the secretary of energy, minerals and natural
resources as fulfilling the purposes as set forth in Section
75-9-2 NMSA 1978. The use and protection of the lands, or
interests therein, for open space, natural area protection,
biodiversity habitat conservation, land preservation,
agricultural preservation, historic preservation or similar use
or purpose of the property shall be assured in perpetuity.

[
F.
]
I.
A taxpayer may apply for certification of
eligibility for the tax credit provided by this section from
the energy, minerals and natural resources department. If the
energy, minerals and natural resources department determines
that the application meets the requirements of this section and
that the property conveyed will not adversely affect the
property rights of contiguous landowners, it shall issue a
certificate of eligibility to the taxpayer, which shall include
a calculation of the maximum amount of tax credit for which the
taxpayer would be eligible. The energy, minerals and natural
resources department may issue rules governing the procedure
for administering the provisions of this subsection.

[
G.
]
J.
To receive a credit pursuant to this
section, a person shall apply to the [
taxation and revenue
]
department on forms and in the manner prescribed by the
department. The application shall include a certificate of
eligibility issued by the energy, minerals and natural
resources department pursuant to Subsection [
F
]
I
of this
section. If all of the requirements of this section have been
complied with, the [
taxation and revenue
] department shall
issue to the applicant a document granting the tax credit. The
document shall be numbered for identification and declare its
date of issuance and the amount of the tax credit allowed for
the qualified donation made pursuant to this section.

[
H.
]
K.
The tax credit represented by a document
issued pursuant to Subsection [
G
]
J
of this section for a
conveyance made on or after January 1, 2008, or an increment of
that tax credit, may be sold, exchanged or otherwise
transferred and may be carried forward for a period of twenty
taxable years following the taxable year in which the credit
originated until fully expended. A tax credit or increment of
a tax credit may only be transferred once. The credit may be
transferred to any taxpayer. A taxpayer to whom a credit has
been transferred may use the credit for the taxable year in
which the transfer occurred and [
unused amounts may be carried
forward to succeeding taxable years, but in no event may the
transferred credit be used more than twenty years after it was
originally issued
]
the portion of the tax credit that exceeds a
taxpayer's income tax liability in the taxable year in which
the credit is claimed shall be refunded to the taxpayer
.

[
I.
]
L.
A tax credit issued pursuant to this
section shall be transferred through a qualified intermediary.
The qualified intermediary shall, by means of a sworn notarized
statement, notify the [
taxation and revenue
] department of the
transfer and of the date of the transfer within ten days of the
transfer. Credits shall only be transferred in increments of
ten thousand dollars ($10,000) or more. The qualified
intermediary shall keep an account of the credits and have the
authority to issue sub-numbers registered with the [
taxation
and revenue
] department and traceable to the original credit.

[
J.
]
M.
If a charitable deduction is claimed on the
taxpayer's federal income tax for any contribution for which
the credit provided by this section is claimed, the taxpayer's
itemized deductions for New Mexico income tax shall be reduced
by the amount of the deduction for the contribution in order to
determine the New Mexico taxable income of the taxpayer.

[
K.
]
N.
For the purposes of this section:

(1) "qualified intermediary" does not include
a person who has been previously convicted of a felony, who has
had a professional license revoked, who is engaged in the
practice defined in Section 61-28B-3 NMSA 1978 and who is
identified in Section 61-29-2 NMSA 1978, and does not include
any entity owned wholly or in part or employing any of the
foregoing persons; and

(2) "taxpayer" means a citizen or resident of
the United States, a domestic partnership, a limited liability
company, a domestic corporation, an estate, including a foreign
estate, or a trust."

SECTION 2.
Section 7-2A-8.9 NMSA 1978 (being Laws 2003,
Chapter 331, Section 8, as amended) is amended to read:

"7-2A-8.9. TAX CREDIT--CERTAIN CONVEYANCES OF REAL
PROPERTY.--

A. There shall be allowed as a credit against the
tax liability imposed by the Corporate Income and Franchise Tax
Act an amount equal to [
fifty percent
]
the following
percentages
of the fair market value of land or interest in
land that is conveyed for the purpose of open space, natural
resource or biodiversity conservation, agricultural
preservation or watershed or historic preservation as an
unconditional donation in perpetuity by the landowner or
taxpayer to a public or private conservation agency eligible to
hold the land and interests therein for conservation or
preservation purposes:

(1) fifty percent for land or an interest in
land conveyed prior to July 1, 2026; and

(2) eighty percent for land or an interest in
land conveyed on or after July 1, 2026.

B.
The fair market value of qualified donations
made pursuant to this section shall be substantiated by a
"qualified appraisal" prepared by a "qualified appraiser", as
those terms are defined under applicable federal laws and
regulations governing charitable contributions.

[
B.
]
C.
The amount of the credit that may be
claimed by a taxpayer shall not exceed:

(1)
one hundred thousand dollars ($100,000)
for a conveyance made prior to January 1, 2008; [
and shall not
exceed
]

(2)
two hundred fifty thousand dollars
($250,000) for a conveyance made on or after [
that date. In
addition, in a taxable year, the credit used may not exceed the
amount of corporate income tax otherwise due. A portion of the
credit that is unused in a taxable year may be carried over for
a maximum of twenty consecutive taxable years following the
taxable year in which the credit originated until fully
expended. A taxpayer may claim only one tax credit per taxable
year
]
January 1, 2008 but prior to July 1, 2026; and

(3) two million dollars ($2,000,000) for a
conveyance made on or after July 1, 2026.

D. A taxpayer may only qualify for one tax credit
per taxable year. If multiple taxpayers are record owners of a
qualified donation, each taxpayer that is a record owner of the
qualified donation may claim a tax credit in proportion to that
taxpayer's ownership interest; provided that the total credit
claimed by all record owners shall not exceed the value that
would accrue if the qualified donation was made by a single
owner.

[
C.
]
E.
Qualified donations shall include the
conveyance in perpetuity of a fee interest in real property or
a less-than-fee interest in real property, such as a
conservation restriction, preservation restriction,
agricultural preservation restriction or watershed preservation
restriction, pursuant to the Land Use Easement Act; provided
that the less-than-fee interest qualifies as a charitable
contribution deduction under Section 170(h) of the Internal
Revenue Code. Dedications of land for open space for the
purpose of fulfilling density requirements to obtain
subdivision or building permits shall not be considered as
qualified donations pursuant to the Land Conservation
Incentives Act.
The portion of the tax credit that exceeds a
taxpayer's corporate income tax liability in the taxable year
in which the credit is claimed shall be refunded to the
taxpayer.

[
D.
]
F.
Qualified donations shall be eligible for
the tax credit if the donations are made to the state of New
Mexico, a political subdivision thereof or a charitable
organization described in Section 501(c)(3) of the Internal
Revenue Code and that meets the requirements of Section
170(h)(3) of that code.

[
E.
]
G.
To be eligible for treatment as qualified
donations under this section, land or interests in lands must
be certified by the secretary of energy, minerals and natural
resources as fulfilling the purposes as set forth in Section
[
5-9-2
]
75-9-2
NMSA 1978. The use and protection of the lands,
or interests therein, for open space, natural area protection,
biodiversity habitat conservation, land preservation,
agricultural preservation, historic preservation or similar use
or purpose of the property shall be assured in perpetuity.

[
F.
]
H.
A taxpayer may apply for certification of
eligibility for the tax credit provided by this section from
the energy, minerals and natural resources department. If the
energy, minerals and natural resources department determines
that the application meets the requirements of this section and
that the property conveyed will not adversely affect the
property rights of contiguous landowners, it shall issue a
certificate of eligibility to the taxpayer, which shall include
a calculation of the maximum amount of tax credit for which the
taxpayer would be eligible. The energy, minerals and natural
resources department may issue rules governing the procedure
for administering the provisions of this subsection.

[
G.
]
I.
To receive a credit pursuant to this
section, a person shall apply to the [
taxation and revenue
]
department on forms and in the manner prescribed by the
department. The application shall include a certificate of
eligibility issued by the energy, minerals and natural
resources department pursuant to Subsection [
F
]
H
of this
section. If all of the requirements of this section have been
complied with, the [
taxation and revenue
] department shall
issue to the applicant a document granting the tax credit. The
document shall be numbered for identification and declare its
date of issuance and the amount of the tax credit allowed for
the qualified donation made pursuant to this section.

[
H.
]
J.
The tax credit represented by a document
issued pursuant to Subsection [
G
]
I
of this section for a
conveyance made on or after January 1, 2008, or an increment of
that tax credit, may be sold, exchanged or otherwise
transferred and may be carried forward for a period of twenty
taxable years following the taxable year in which the credit
originated until fully expended. A tax credit or increment of
a tax credit may only be transferred once. The credit may be
transferred to any taxpayer. A taxpayer to whom a credit has
been transferred may use the credit for the taxable year in
which the transfer occurred and [
unused amounts may be carried
forward to succeeding taxable years, but in no event may the
transferred credit be used more than twenty years after it was
originally issued
]
the portion of the tax credit that exceeds a
taxpayer's corporate income tax liability in the taxable year
in which the credit is claimed shall be refunded to the
taxpayer
.

[
I.
]
K.
A tax credit issued pursuant to this
section shall be transferred through a qualified intermediary.
The qualified intermediary shall, by means of a sworn notarized
statement, notify the [
taxation and revenue
] department of the
transfer and of the date of the transfer within ten days of the
transfer. Credits shall only be transferred in increments of
ten thousand dollars ($10,000) or more. The qualified
intermediary shall keep an account of the credits and have the
authority to issue sub-numbers registered with the [
taxation
and revenue
] department and traceable to the original credit.

[
J.
]
L.
If a charitable deduction is claimed on the
taxpayer's federal income tax for any contribution for which
the credit provided by this section is claimed, the taxpayer's
itemized deductions for New Mexico income tax shall be reduced
by the amount of the deduction for the contribution in order to
determine the New Mexico taxable income of the taxpayer.

[
K.
]
M.
For the purposes of this section:

(1) "qualified intermediary" does not include
a person who has been previously convicted of a felony, who has
had a professional license revoked, who is engaged in the
practice defined in Section 61-28B-3 NMSA 1978 and who is
identified in Section 61-29-2 NMSA 1978, and does not include
any entity owned wholly or in part or employing any of the
foregoing persons; and

(2) "taxpayer" means a citizen or resident of
the United States, a domestic partnership, a limited liability
company, a domestic corporation, an estate, including a foreign
estate, or a trust."

SECTION 3.
APPLICABILITY.--The provisions of this act
apply to taxable years beginning on or after January 1, 2026.

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