The Sustainable Building Tax Credit offers a new incentive for taxpayers who build green in New Mexico.
Codified in NMSA Sections 7-2-18.19 (2007) and 7-2A-21 (2007), this credit embraces the so-called “green standard”, which refers to high-performance buildings (both residential, including EPA Energy Star certified manufactured housing, and commercial) that embrace energy efficiency. The policy basis for the legislation, which authorizes $10,000,000 of transferable tax credits for green buildings certified during or after 2007, is that green building creates environmentally sustainable, economical, productive and healthy construction.
The actual credit is based on the square footage of the entire building as opposed to similar tax constructs in places like Maryland, which correlate the credit to construction costs. In most cases, it is specifically tied to the U.S. Green Building Council’s National Standardsthrough the rating system prescribed by the Leadership in Energy and Environmental Design (LEED for short). Energy Star manufactured homes, however, are tied to a separate standard which allows for a $3 credit per square foot for up to 3,000 square feet.
As the most commonly accepted and widely used green building standards, LEED awards points to structures in the following six categories: sustainable siting, water efficiency, energy and atmosphere, materials and resources, indoor environmental air quality, and innovation in design. Each structure achieves a LEED certification level, such as silver or gold, based on how many points it scores in each of these categories. The measure of the credit is based on the particular LEED certification achieved, multiplied by the square footage of the building.
The Sustainable Building Tax Credit has a seven year carryforward period. If the credit is less than $25,000, the full amount may be used in the first year. Otherwise, up to 25% of the credit may be used in the first year, and 25% may be used in each of the three succeeding years. Unlike the Conservation Easement credits, these credits cannot be fragmented when transferred. Please view the Comparison Chart for a more detailed look.