Earning a Tax Credit

What is the New Mexico Land Conservation Tax Credit?

The New Mexico Land Conservation tax credit is a tax credit New Mexico taxpayers may receive in exchange for the donation of a conservation easement or land. Originally, the tax credit was valued at up to $100, 000. In 2007, the law was expanded to increase the incentives to taxpayers. Credits for conservation easement donations made after January 2008 are now valued at 50% of the donated value, up to a maximum credit amount of $250, 000. In addition, the tax credit is now transferable, allowing a donor to sell an earned credit to a third party.

How can I earn and use a Tax Credit?

To earn a tax credit, a landowner donates a conservation easement, or land itself, to a qualified land trust or governmental entity. The Energy, Minerals and Natural Resources Department reviews the donation to determine whether it is eligible to earn a tax credit. If the donation is approved, a credit is earned. Once the credit has been earned, the landowner may:

  • Apply the credit to reduce their own state income tax liability (and carry forward unused credits for up to 20 years)
  • Receive immediate compensation for the credit by transferring all or a portion of it to a third party.

How do I know if my donation will earn a Tax Credit?

Only donations deemed by the state to meet applicable standards will be eligible to earn a tax credit. In making its determination, the state will consider many factors, including, but not limited to:

  • The conservation values of the property (agricultural, scenic, wildlife habitat, educational, recreational and historic).
  • The size of the property relative to the conservation values to be protected.
  • What, if any, development rights will be reserved and how might they impact conservation values.
  • Whether the appraisal of donated value meets applicable standards.

To maximize your chances of earning a tax credit, it is of utmost importance to work with a professional land trust; experienced legal, tax, and appraisal advisors; and knowledgeable credit transfer facilitators.

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