Why should I sell my tax credit?
You may want to sell a tax credit if your credit is larger than your New Mexico tax liability. You should consult with a tax professional or other advisor to find out whether it is in your best interests to sell your credit.
How much will my tax credit sell for?
The return to the seller cannot be predicted with precision and is subject to change and fluctuation. Most types of the tax credits have only recently become transferable and up until this point there has been no discernable market for some tax credits.
Should I register with you even if my credit has not yet been issued?
Yes, we encourage you to register even if your tax credit has not yet been issued. Your registration allows us to place you on our priority list, send you further information, and begin the process of matching you with a potential buyer.
If I sell a partial credit, who will keep track of the sales?
The state has a process for keeping track of partial sales. Qualified intermediaries (like New Mexico Tax Credit Alliance) are charged with the responsibility of issuing sub-numbers for fragmented tax credits and notifying the New Mexico Department of Taxation and Revenue, and the Internal Revenue Service, of tax credit sales. In short, we will take of ensuring that any subdividing of your credits is accounted for properly.
Are there federal tax benefits from the same activity that generates a transferable state income tax credit?
Some tax credits tie into the federal income tax incentives created through the Internal Revenue Code of 1986, as amended. For example, Section 170(h) of the Code prescribes the requirements for real property charitable contributions, which include qualified conservation easement donations. Thus, for qualified contributions, it is possible for a grantor to secure a federal income tax deduction and a New Mexico income tax credit for the same contribution of real property. The grantor also may be able to reduce property tax and estate tax burdens.
Can I sell my credit even if I have taken the full federal tax deduction for my donation?
Yes. There are no state-level sale impediments to claiming other benefits associated with the same activity that created the New Mexico tax credit.
Do I pay tax on the money I receive for the sale of my tax credit?
Yes and no. The sale proceeds probably are not subject to New Mexico gross receipts tax, although our company charges gross receipts tax on the commission it receives. The sale of a tax credit is a realization event that triggers tax gain for income tax purposes. The character (i.e., capital gain or ordinary income) of this gain is presently unknown. Tax gain can be somewhat addressed through income tax planning. Please consult your professional advisor for such advice and planning.
Can I sell my own credit?
By statute, the sale of Conservation Easement Tax Credits does require the use of a qualified intermediary, which is tasked with certain reporting and tracking requirements. Other types of credits do not require the use of a qualified intermediary to effect a sale. Nevertheless, we anticipate that many holders of credits that do not require a qualified intermediary will choose to use our service to locate buyers, set closings, draft legal documents necessary to transfer title, and perform the logistical tasks associated with ensuring that their transfers are recognized by the appropriate state agencies.