2023 New Mexico Statutes › Chapter 7 - Taxation › Article 2 - Income Tax General Provisions › Section 7-2-18.32 - 2021 sustainable building tax credit.

A. The tax credit provided by this section may be referred to as the "2021 sustainable building tax credit". For taxable years prior to January 1, 2028, a taxpayer who is a building owner and files an income tax return is eligible to be granted a 2021 sustainable building tax credit by the department if the requirements of this section are met. The 2021 sustainable building tax credit shall be available for the construction in New Mexico of a sustainable building, the renovation of an existing building in New Mexico, the permanent installation of manufactured housing, regardless of where the housing is manufactured, that is a sustainable building or the installation of energy-conserving products to existing buildings in New Mexico, as provided in this section. The tax credit provided in this section may not be claimed with respect to the same sustainable building for which the 2021 sustainable building tax credit provided in the Corporate Income and Franchise Tax Act [Chapter 7, Article 2A NMSA 1978] or the 2015 sustainable building tax credit pursuant to the Income Tax Act or the Corporate Income and Franchise Tax Act has been claimed.
B. The amount of a 2021 sustainable building tax credit shall be determined as follows:
(1) for the construction of a new sustainable commercial building that is broadband ready and electric vehicle ready and is completed on or after January 1, 2022, the amount of credit shall be calculated:
(a) based on the certification level the building has achieved in the rating level and the amount of qualified occupied square footage in the building, as indicated on the following chart:
Rating Level
Qualified
Tax Credit
Occupied
per Square
Square Footage
Foot
LEED-NC Platinum
First 10,000
$5.25
Next 40,000
$2.25
Over 50,000
up to 200,000
$1.00
LEED-EB or CS Platinum
First 10,000
$3.40
Next 40,000
$1.30
Over 50,000
up to 200,000
$0.35
LEED-CI Platinum
First 10,000
$1.50
Next 40,000
$0.40
Over 50,000
up to 200,000
$0.30
LEED-NC Gold
First 10,000
$3.00
Next 40,000
$1.00
Over 50,000
up to 200,000
$0.25
LEED-EB or -CS Gold
First 10,000
$2.00
Next 40,000
$1.00
Over 50,000
up to 200,000
$0.25
LEED-CI Gold
First 10,000
$0.90
Next 40,000
$0.40
Over 50,000
up to 200,000
$0.10; and
(b) with additional amounts based on the additional criteria and the amount of qualified occupied square footage, as indicated in the following chart:
Additional Criteria
Qualified
Tax Credit
Occupied
per Square
Square Footage
Foot
Fully Electric Building
First 50,000
$1.00
Over 50,000
up to 200,000
$0.50
Zero Carbon, Energy,
Waste or Water Certified
First 50,000
$0.25
Over 50,000
up to 200,000
$0.10;
(2) for the renovation of a commercial building that was built at least ten years prior to the date of the renovation, has twenty thousand square feet or more of space in which temperature is controlled and is broadband ready and electric vehicle ready, the amount of credit shall be calculated by multiplying two dollars twenty-five cents ($2.25) by the amount of qualified occupied square footage in the building, up to a maximum of one hundred fifty thousand dollars ($150,000) per renovation; provided that the renovation reduces total energy and power costs by fifty percent when compared to the most current energy standard for buildings except low-rise residential buildings, as developed by the American society of heating, refrigerating and air-conditioning engineers;
(3) for the installation of the following energy-conserving products to an existing commercial building with less than twenty thousand square feet of space in which temperature is controlled that is broadband ready, the amount of credit shall be based on the cost of the product installed, which shall include installation costs, and if the building is affordable housing, per product installed:
Product
Amount of Credit
Affordable
Non-Affordable
Housing
Housing
Energy Star Air
Source Heat Pump
$2,000
$1,000
Energy Star Ground
Source Heat Pump
$2,000
$1,000
Energy Star
Windows and Doors
100% of product
50% of product
cost up to
cost up to
$1,000
$500
Insulation Improvements That
Meet Rules of the
Energy, Minerals and Natural
Resources Department
100% of product
50% of product
cost up to
cost up to
$2,000
$1,000
Energy Star Heat Pump Water
Heater
$700
$350
Electric Vehicle Ready
100% of product
50% of product
cost up to
cost up to
$3,000
$1,500;
(4) for the construction of a new sustainable residential building that is broadband ready and electric vehicle ready and is completed on or after January 1, 2022, the amount of credit shall be calculated:
(a) based on the certification level the building has achieved in the rating level and the amount of qualified occupied square footage in the building, as indicated on the following chart:
Rating Level
Qualified
Tax Credit
Occupied
per Square
Square Footage
Foot
LEED-H Platinum
Up to 2,000
$5.50
LEED-H Gold
Up to 2,000
$3.80
Build Green Emerald
Up to 2,000
$5.50
Build Green Gold
Up to 2,000
$3.80
Manufactured Housing
Up to 2,000
$2.00; and
(b) with additional amounts based on the additional criteria and the amount of qualified occupied square footage, as indicated in the following chart:
Additional Criteria
Qualified
Tax Credit
Occupied
per Square
Square Footage
Foot
Fully Electric Building
Up to 2,000
$1.00
Zero Carbon, Energy,
Waste or Water Certified
Up to 2,000
$0.25; and
(5) for the installation of the following energy-conserving products to an existing residential building, the amount of credit shall be based on the cost of the product installed, which shall include installation costs, and if the building is affordable housing or the taxpayer is a low-income taxpayer, per product installed:
Product
Amount of Credit
Affordable
Non-Affordable
Housing and
Housing and
Low-Income
Non-Low Income
Energy Star Air
Source Heat Pump
$2,000
$1,000
Energy Star Ground
Source Heat Pump
$2,000
$1,000
Energy Star
Windows and Doors
100% of
50% of product
product cost
cost up to
up to $1,000
$500
Insulation Improvements That
Meet Rules of the
Energy, Minerals and Natural
Resources Department
100% of product
50% of product
cost up to
cost up to
$2,000
$1,000
Energy Star Heat Pump Water
Heater
$700
$350
Electric Vehicle Ready
$1,000
$500.
C. A person who is a building owner may apply for a certificate of eligibility for the 2021 sustainable building tax credit from the energy, minerals and natural resources department after the construction, installation or renovation of the sustainable building or installation of energy-conserving products in an existing building is complete. Applications shall be considered in the order received. If the energy, minerals and natural resources department determines that the building owner meets the requirements of this subsection and that the building with respect to which the application is made meets the requirements of this section for a 2021 sustainable building tax credit, the energy, minerals and natural resources department may issue a certificate of eligibility to the building owner, subject to the limitations in Subsection D of this section. The certificate shall include the rating system certification level awarded to the building, the amount of qualified occupied square footage in the building, a calculation of the maximum amount of 2021 sustainable building tax credit for which the building owner would be eligible, the identification number, date of issuance and the first taxable year that the credit shall be claimed. The energy, minerals and natural resources department may issue rules governing the procedure for administering the provisions of this subsection. If the certification level for the sustainable residential building is awarded on or after January 1, 2022, the energy, minerals and natural resources department may issue a certificate of eligibility to a building owner who is:
(1) the owner of the sustainable residential building at the time the certification level for the building is awarded; or
(2) the subsequent purchaser of a sustainable residential building with respect to which no tax credit has been previously claimed.
D. Except as provided in Subsection E of this section, the energy, minerals and natural resources department may issue a certificate of eligibility only if the total amount of 2021 sustainable building tax credits represented by certificates of eligibility issued by the energy, minerals and natural resources department pursuant to this section and pursuant to the Corporate Income and Franchise Tax Act [Chapter 7, Article 2A NMSA 1978] shall not exceed in any calendar year an aggregate amount of:
(1) one million dollars ($1,000,000) with respect to the construction of new sustainable commercial buildings;
(2) two million dollars ($2,000,000) with respect to the construction of new sustainable residential buildings that are not manufactured housing;
(3) two hundred fifty thousand dollars ($250,000) with respect to the construction of new sustainable residential buildings that are manufactured housing;
(4) one million dollars ($1,000,000) with respect to the renovation of large commercial buildings; and
(5) two million nine hundred thousand dollars ($2,900,000) with respect to the installation of energy-conserving products in existing commercial buildings pursuant to Paragraph (3) of Subsection B of this section and existing residential buildings pursuant to Paragraph (5) of Subsection B of this section.
E. For any taxable year that the energy, minerals and natural resources department determines that applications for sustainable building tax credits for any type of sustainable building pursuant to Subsection D of this section are less than the aggregate limit for that type of sustainable building for that taxable year, the energy, minerals and natural resources department shall allow the difference between the aggregate limit and the applications to be added to the aggregate limit of another type of sustainable building for which applications exceeded the aggregate limit for that taxable year. Any excess not used in a taxable year shall not be carried forward to subsequent taxable years.
F. Installation of a solar thermal system or a photovoltaic system eligible for the new solar market development tax credit pursuant to Section 7-2-18.31 NMSA 1978 shall not be used as a component of qualification for the rating system certification level used in determining eligibility for the 2021 sustainable building tax credit, unless a new solar market development tax credit pursuant to Section 7-2-18.31 NMSA 1978 has not been claimed with respect to that system and the building owner and the taxpayer claiming the 2021 sustainable building tax credit certify that such a tax credit will not be claimed with respect to that system.
G. To claim the 2021 sustainable building tax credit, the building owner shall provide to the taxation and revenue department a certificate of eligibility issued by the energy, minerals and natural resources department pursuant to the requirements of Subsection C of this section and any other information the taxation and revenue department may require.
H. If the approved amount of a 2021 sustainable building tax credit for a taxpayer in a taxable year represented by a document issued pursuant to Subsection C of this section is:
(1) less than one hundred thousand dollars ($100,000), a maximum of twenty-five thousand dollars ($25,000) shall be applied against the taxpayer's income tax liability for the taxable year for which the credit is approved and the next three subsequent taxable years as needed depending on the amount of credit; or
(2) one hundred thousand dollars ($100,000) or more, increments of twenty-five percent of the total credit amount in each of the four taxable years, including the taxable year for which the credit is approved and the three subsequent taxable years, shall be applied against the taxpayer's income tax liability.
I. If the sum of all 2021 sustainable building tax credits that can be applied to a taxable year for a taxpayer, calculated according to Paragraph (1) or (2) of Subsection H of this section, exceeds the taxpayer's income tax liability for that taxable year, the excess may be carried forward for a period of up to seven years; provided that if the taxpayer is a low-income taxpayer, the excess shall be refunded to the taxpayer.
J. A taxpayer who otherwise qualifies and claims a 2021 sustainable building tax credit with respect to a sustainable building owned by a partnership or other business association of which the taxpayer is a member may claim a credit only in proportion to that taxpayer's interest in the partnership or association. The total credit claimed in the aggregate by all members of the partnership or association with respect to the sustainable building shall not exceed the amount of the credit that could have been claimed by a sole owner of the property.
K. Married individuals who file separate returns for a taxable year in which they could have filed a joint return may each claim only one-half of the 2021 sustainable building tax credit that would have been allowed on a joint return.
L. If the requirements of this section have been complied with, the department shall issue to the building owner a document granting a 2021 sustainable building tax credit. The document shall be numbered for identification and declare its date of issuance and the amount of the tax credit allowed pursuant to this section. The document may be submitted by the building owner with that taxpayer's income tax return, if applicable, or may be sold, exchanged or otherwise transferred to another taxpayer. The parties to such a transaction shall notify the department of the sale, exchange or transfer within ten days of the sale, exchange or transfer.
M. The department and the energy, minerals and natural resources department shall compile an annual report on the 2021 sustainable building tax credit created pursuant to this section that shall include the number of taxpayers approved to receive the tax credit, the aggregate amount of tax credits approved and any other information necessary to evaluate the effectiveness of the tax credit. The department shall present the report to the revenue stabilization and tax policy committee and the legislative finance committee with an analysis of the effectiveness and cost of the tax credit.
N. For the purposes of this section:
(1) "broadband ready" means a building with an internet connection capable of connecting to a broadband provider;
(2) "build green emerald" means the emerald level certification standard adopted by build green New Mexico, which includes water conservation standards and uses forty percent less energy than is required by the prescriptive path of the most current residential energy conservation code promulgated by the construction industries division of the regulation and licensing department;
(3) "build green gold" means the gold level certification standard adopted by build green New Mexico, which includes water conservation standards and uses thirty percent less energy than is required by the prescriptive path of the most current residential energy conservation code promulgated by the construction industries division of the regulation and licensing department;
(4) "electric vehicle ready" means a property that for commercial buildings provides at least ten percent of parking spaces and for residential buildings at least one parking space with one forty-ampere, two-hundred-eight-volt or two-hundred-forty-volt dedicated branch circuit for servicing electric vehicles that terminates in a suitable termination point, such as a receptacle or junction box, and is located in reasonably close proximity to the proposed location of the parking spaces;
(5) "energy rating system index" means a numerical score given to a building where one hundred is equivalent to the 2006 international energy conservation code and zero is equivalent to a net-zero home. As used in this paragraph, "net-zero home" means an energy-efficient home where, on a source energy basis, the actual annual delivered energy is less than or equal to the on-site renewable exported energy;
(6) "Energy Star" means products and devices certified under the energy star program administered by the United States environmental protection agency and United States department of energy that meet the specified performance requirements at the installed locations;
(7) "fully electric building" means a building that uses a permanent supply of electricity as the source of energy for all space heating, water heating, including pools and spas, cooking appliances and clothes drying appliances and, in the case of a new building, has no natural gas or propane plumbing installed in the building or, in the case of an existing building, has no connected natural gas or propane plumbing;
(8) "LEED" means the most current leadership in energy and environmental design green building rating system guidelines developed and adopted by the United States green building council;
(9) "LEED-CI" means the LEED rating system for commercial interiors;
(10) "LEED-CS" means the LEED rating system for the core and shell of buildings;
(11) "LEED-EB" means the LEED rating system for existing buildings;
(12) "LEED gold" means the rating in compliance with, or exceeding, the second-highest rating awarded by the LEED certification process;
(13) "LEED-H" means the LEED rating system for homes;
(14) "LEED-NC" means the LEED rating system for new buildings and major renovations;
(15) "LEED platinum" means the rating in compliance with, or exceeding, the highest rating awarded by the LEED certification process;
(16) "low-income taxpayer" means a taxpayer with an annual household adjusted gross income equal to or less than two hundred percent of the federal poverty level guidelines published by the United States department of health and human services;
(17) "manufactured housing" means a multisectioned home that is:
(a) a manufactured home or modular home;
(b) a single-family dwelling with a heated area of at least thirty-six feet by twenty-four feet and a total area of at least eight hundred sixty-four square feet;
(c) constructed in a factory to the standards of the United States department of housing and urban development, the National Manufactured Housing Construction and Safety Standards Act of 1974 and the Housing and Urban Development Zone Code 2 or New Mexico construction codes up to the date of the unit's construction; and
(d) installed consistent with the Manufactured Housing Act [Chapter 60, Article 14 NMSA 1978] and rules adopted pursuant to that act relating to permanent foundations;
(18) "qualified occupied square footage" means the occupied spaces of the building as determined by:
(a) the United States green building council for those buildings obtaining LEED certification;
(b) the administrators of the build green New Mexico rating system for those homes obtaining build green New Mexico certification; and
(c) the United States environmental protection agency for Energy Star-certified manufactured homes;
(19) "person" does not include state, local government, public school district or tribal agencies;
(20) "sustainable building" means either a sustainable commercial building or a sustainable residential building;
(21) "sustainable commercial building" means:
(a) a commercial building that is certified as any LEED platinum or gold for commercial buildings;
(b) a multifamily dwelling unit that is certified as LEED-H platinum or gold or build green emerald or gold and uses at least thirty percent less energy than is required by the prescriptive path of the most current applicable energy conservation code promulgated by the construction industries division of the regulation and licensing department for build green gold or LEED-H, or uses at least forty percent less energy than is required by the prescriptive path of the most current residential energy conservation code promulgated by the construction industries division of the regulation and licensing department for build green emerald or LEED platinum; or
(c) a building that: 1) is certified at LEED-NC, LEED-EB, LEED-CS or LEED-CI platinum or gold levels; 2) achieves any prerequisite for and at least one point related to commissioning under the LEED energy and atmosphere category, if included in the applicable rating system; and 3) has reduced energy consumption beginning January 1, 2012 by forty percent based on the national average for that building type as published by the United States department of energy as substantiated by the United States environmental protection agency target finder energy performance results form, dated no sooner than the schematic design phase of development;
(22) "sustainable residential building" means:
(a) a building used as a single-family residence that: 1) is certified as LEED-H platinum or gold or build green emerald or gold; 2) uses at least thirty percent less energy than is required by the prescriptive path of the most current residential energy conservation code promulgated by the construction industries division of the regulation and licensing department for build green gold or LEED-H, or uses at least forty percent less energy than is required by the prescriptive path of the most current residential energy conservation code promulgated by the construction industries division of the regulation and licensing department for build green emerald or LEED platinum; 3) has indoor plumbing fixtures and water-using appliances that, on average, have flow rates equal to or lower than the flow rates required for certification by WaterSense; 4) if landscape area is available at the front of the property, has at least one water line outside the building below the frost line that may be connected to a drip irrigation system; and 5) if landscape area is available at the rear of the property, has at least one water line outside the building below the frost line that may be connected to a drip irrigation system; or
(b) manufactured housing that is Energy Star-qualified;
(23) "tribal" means of, belonging to or created by a federally recognized Indian nation, tribe or pueblo;
(24) "WaterSense" means a program created by the federal environmental protection agency that certifies water-using products that meet the environmental protection agency's criteria for efficiency and performance;
(25) "zero carbon certified" means a building that is certified as LEED zero carbon by achieving a carbon-dioxide-equivalent balance of zero for the building;
(26) "zero energy certified" means a building that is certified as LEED zero energy by achieving a source energy use balance of zero for the building;
(27) "zero waste certified" means a building that is certified as LEED zero waste by achieving green building certification incorporated's true zero waste certification at the platinum level; and
(28) "zero water certified" means a building that is certified as LEED zero water by achieving a potable water use balance of zero for the building.
History:
Laws 2021, ch. 84, § 2; 2022, ch. 47, § 9.
ANNOTATIONS
The 2022 amendment,
effective May 18, 2022, provided for an earlier sunset date for the 2021 sustainable building tax credit, and changed the start of the eligibility period for the 2021 sustainable building tax credit from April 1, 2023 to January 1, 2022; in Subsection A, after "prior to January 1,", changed "2030" to "2028"; in Subsection B, Paragraphs B(1) and B(4), deleted "April 1, 2023" and added "January 1, 2022"; in Subsection C, after "on or after January 1", changed "2021" to "2022"; and in Subsection F, after each occurrence of "pursuant to Section", deleted "7-2-18.14" and added "7-2-18.31".
Applicability.
— Laws 2021, ch. 84, § 5 provided that the provisions of 7-2-18.32 NMSA 1978 and 7-2A-28.1 NMSA 1978 apply to taxable years beginning on or after January 1, 2021.