Why should I buy a tax credit?

Ordinarily, one dollar of state tax credit offsets one dollar of state tax liability.  Because tax credits sell at a discount (i.e., buyers typically purchase a dollar of tax credit for less than a dollar), you can save money on your New Mexico taxes.

How much will I spend for a tax credit?

The cost of tax credits cannot be predicted with precision.  Although the markets will likely vary for the different types of tax credits, based on the experiences of other states, it may be reasonable to predict a cost to the buyer of approximately 85% of the value of tax credits that can be used in full in the first tax year.  Credits that must be used over time, have a short carryforward period, or have some other unique attribute, may cause a steeper purchase price discount.

Can tax credits I buy be carried over to the following year if I don’t use them all?

Yes, provided that the credit has a sufficient carryforward period.  All three types of New Mexico tax credits have a carryforward period, but the amount of time differs from credit to credit.

If I buy a tax credit and decide not to use it, can I later sell it?

Not necessarily.  By statute, Conservation Easement Tax Credits may be transferred only once.  There is no express statutory prohibition against multiple transfers of Sustainable Building and Rural Job Tax Credits.  Moreover, a sold credit’s carryforward period continues to run without regard to multiple transfers.

What types of taxes can I use the tax credit to pay?

Conservation Easement and Sustainable Building Tax Credits may be used only to offset New Mexico income taxes (whether corporate or personal).  The Rural Job Tax Credit may be used for corporate and personal income tax, as well as the “modified combined tax liability” defined in NMSA Section 7-2E-1.1(J)(4) (2007).