TITLE 3 TAXATION
CHAPTER 13 BUSINESS TAX CREDITS
PART 20 LAND CONSERVATION INCENTIVES TAX
CREDIT
3.13.20.1 ISSUING AGENCY:
Energy, Minerals and Natural Resources Department and the Taxation and
Revenue Department.
[3.13.20.1 NMAC -
Rp, 3.13.20.1 NMAC, 6-16-2008]
3.13.20.2 SCOPE:
3.13.20 NMAC applies to application and certification procedures for
administration of the land conservation incentives tax credit.
[3.13.20.2 NMAC -
Rp, 3.13.20.2 NMAC, 6-16-2008]
3.13.20.3 STATUTORY AUTHORITY:
3.13.20 NMAC is adopted pursuant to NMSA 1978, Sections 7-2-18.10;
7-2A-8.9; 9-1-5(E) and 9-11-6.2 and the Land Conservation Incentives Act, NMSA
1978, Sections 75-9-1 to 75-9-6.
[3.13.20.3 NMAC -
Rp, 3.13.20.3 NMAC, 6-16-2008]
3.13.20.4 DURATION:
Permanent.
[3.13.20.4 NMAC -
Rp, 3.13.20.4 NMAC, 6-16-2008]
3.13.20.5 EFFECTIVE DATE: June
16, 2008, unless a later date is cited at the end of a section.
[3.13.20.5 NMAC -
Rp, 3.13.20.5 NMAC, 6-16-2008]
3.13.20.6 OBJECTIVE:
3.13.20 NMAC's objective is to establish procedures for certifying
whether donations of land or interests in land to public or private
conservation agencies made on or after January 1, 2004, are eligible for the
land conservation incentives tax credit and to administer the land conservation
incentives tax credit.
[3.13.20.6 NMAC -
Rp, 3.13.20.6 NMAC, 6-16-2008]
3.13.20.7 DEFINITIONS:
A. "Applicant"
means a taxpayer who on or after January 1, 2004, donates or partially donates
(or for purposes of 3.13.20.8 NMAC plans to donate or partially donate) through
a bargain sale for a conservation or preservation purpose, a perpetual
less-than-fee interest in land that appears to qualify as a charitable
contribution under 26 U.S.C. section 170(h) and its implementing regulations or
a fee interest in land, which is subject to a perpetual conservation easement,
to a public or private conservation agency.
If more than one taxpayer owns an interest in the land or interest in
land that is the donated or partially donated, they shall be considered one
applicant, but the application shall include the names and addresses of all
taxpayers that own an interest in the donated land or interest in land.
B. "Bargain
sale" means a sale where the taxpayer is paid less than the fair market
value of the land or interest in land.
C. "Building
envelope" means a designated area within a conservation easement that is
identified in the deed of conservation easement that contains existing
structures and activities or will contain future structures and activities that
are for the grantor's continued use of the property but that are prohibited
elsewhere within the conservation easement.
D. "Conservation
or preservation purpose" means open space, natural area preservation, land
conservation or preservation, natural resource or biodiversity conservation
including habitat conservation, forest land preservation, agricultural
preservation, watershed preservation or historic or cultural property
preservation, or similar uses or purposes such as protection of land for
outdoor recreation purposes. The
resources or areas contained in the donation must be significant or important.
E. "Cultural
property" means a structure, place, site or object having historic,
archaeological, scientific, architectural or other cultural significance.
F. "Development
approach" means a method of appraising undeveloped land having a highest
and best use for subdivision into lots.
This approach consists of estimating a final sale price for the total
number of lots into which the property could best be divided and then deducting
all development costs, including the developer's anticipated profit. The remaining sum, the residual, represents
the raw land's market value.
G. "Governmental
body" means the state of New Mexico or any of its political subdivisions.
H. "Interest
in land" means a right in real property, including access, improvement,
water right, fee simple interest, easement, land use easement, mineral right,
remainder interest or other interest in or right in real property that complies
with the requirements of 26 U.S.C. section 170(h)(2) and its implementing
regulations, or any pertinent successor of 26 U.S.C. section 170(h)(2).
I. "Land"
means real property, including rights of way, easements, privileges, water
rights and all other rights or interests connected with real property.
J. "Less-than-fee
interest" means an interest in land that is less than the entire property
or all of the rights in the property or a non-possessory interest in land that
imposes a limitation or affirmative obligation such as a conservation, land use
or preservation restriction or easement.
K. "National
register of historic places" means the register that the United States
secretary of the interior maintains of districts, sites, buildings, structures
and objects significant in American history, architecture, archaeology,
engineering or culture.
L. "Pass-through
entity" means a business association other than a sole proprietorship; an
estate or trust; a corporation, limited liability company, partnership or other
entity not a sole proprietorship taxed as a corporation for federal income tax
purposes for the taxable year; or a partnership that is organized as an
investment partnership in which the partners' income is derived solely from
interest, dividends and sales of securities.
M. "Public or
private conservation agency" means a governmental body or a private
non-profit charitable corporation or trust authorized to do business in New
Mexico that is organized and operated for natural resources, land or historic conservation
purposes and that has tax-exempt status as a public charity under 26 U.S.C.
section 501(c)(3) and meets the requirements of 26 U.S.C. section 170(h)(3) and
its implementing regulations, and has the power to acquire, hold or maintain
land or interests in land.
N. "Qualified
appraisal" means a qualified appraisal as defined in 26 C.F.R. section
1.170A-13(c)(3) or subsequent amendments and does not use the development
approach as the sole means of determining fair market value. The appraisal for a conservation easement or
restriction shall state whether the donation increases the value of other
property the donor or a related person owns.
In accordance with 26 C.F.R. section 1.170A-14(h)(3)(i), if the donation
increases the value of other property the donor or a related person owns the
appraisal shall reflect the increase by reducing the value of the conservation
contribution by the amount of the increase in value to the other property,
whether or not the other property is contiguous with the donated property.
O. "Qualified
appraiser" means a qualified appraiser as defined in 26 C.F.R. section
1.170A-13(c)(5) or subsequent amendments and who is a certified general real
estate appraiser.
P. "Qualified
intermediary" means any person who has not been previously convicted of a
felony, who has not had a professional license revoked, who is not engaged in
the practice of public accountancy as defined in NMSA 1978, Section 61-28B-3 or
who is not identified in the NMSA 1978, Section 61-29-2, which governs real
estate brokers and salespersons, or who is not an entity owned wholly or in
part by or employing a person who has been previously convicted of a felony,
who has had a professional license revoked, who is engaged in the practice of
public accountancy as defined in NMSA 1978, Section 61-28B-3 or who is
identified in NMSA 1978, Section 61-29-2.
Q. "Taxpayer"
means a United States citizen or resident, a United States domestic
partnership, a limited liability company, a United States domestic corporation,
an estate, including a foreign estate, or a trust. A non-profit may be a taxpayer if organized
as a United States domestic partnership, a limited liability company, a United
States domestic corporation or a trust.
A governmental body or other governmental entity is not a taxpayer.
R. "Tax
filer" means a New Mexico taxpayer who files a New Mexico tax return
claiming a tax credit pursuant to the Land Conservation Incentives Act together
with valid numbered documentation from the taxation and revenue department or
valid sub-numbered documentation from a qualified intermediary.
S. "Secretary"
means the secretary of energy, minerals and natural resources department or his
or her designee.
[3.13.20.7 NMAC -
Rp, 3.13.20.7 NMAC, 6-16-2008]
3.13.20.8 GENERAL PROVISIONS:
A. Only an
applicant may apply for a land conservation incentives tax credit.
B. A taxpayer shall
be listed as an owner on the deed conveying the land or interest in land to be
eligible for the land conservation incentives tax credit (see Subsection N of
3.13.20.8 NMAC for use of a land conservation tax credit issued to a
pass-through entity).
C. A taxpayer is
not eligible for a land conservation incentives tax credit if they are or have
been a subsidiary, partner, manager, member, shareholder or beneficiary of a
domestic partnership, limited liability company, domestic corporation or
pass-through entity that owns or has owned the donated land or interest in land
in the five years preceding the date that the applicant conveyed the land or
interest in land.
D. Qualified
donations include a conveyance, on or after January 1, 2004, in perpetuity for
a conservation or preservation purpose of a less-than-fee interest in land that
appears to qualify as a charitable contribution under 26 U.S.C. section 170(h)
and its implementing regulations or a fee interest in land.
E. Dedications of
land for open space for the purpose of fulfilling density requirements to
obtain subdivision or building permits do not qualify for the land conservation
incentives tax credit.
F. For a donation
of a fee interest in land or less-than-fee interest in land that the applicant
conveys, the total amount of the land conservation incentives tax credit for
the donation for which an applicant applies shall not exceed 50 percent of the
fair market value of the land or interest in land that the applicant donated in
perpetuity, regardless of the value of the land or interest in land donated or
the number of taxpayers that own an interest in the donated property. An applicant shall only apply for one land
conservation incentives tax credit per taxpayer per taxable year.
G. For donations
made prior to January 1, 2008, a taxpayer that owns an interest in the donated
land or interest in land may receive a land conservation incentives tax credit
worth the lesser of $100,000 or the taxpayer's proportionate share, as
determined by the taxpayer's ownership interest in the donated land or interest
in land, of 50 percent of the donated land's or interest in land's fair market
value. For donations made on or after
January 1, 2008, a taxpayer that owns an interest in the donated land or
interest in land may receive a land conservation incentives tax credit worth
the lesser of $250,000 or the taxpayer's proportionate share, as determined by
the taxpayer's ownership interest in the donated land or interest in land, of
50 percent of the donated land or interest in land's fair market value. No matter the number of taxpayers that the
donated land or interest in land has, the total land conservation incentives
tax credit all taxpayers receive for the donated land or interest in land
cannot exceed 50 percent of the donated land's or interest in land's fair
market value. Therefore, if the
applicant conveyed the donation on or after January 1, 2008, and there are 10
taxpayers that have an equal interest in donated land or interest in land that
is worth $2,000,000, each taxpayer's land conservation incentives tax credit
would be limited to $100,000.
H. For donations
conveyed prior to January 1, 2008, a husband and wife who both own a recorded
interest in the donated land or interest in land, as opposed to one spouse not
being named on the deed but having a community property interest, may each
receive a land conservation incentives tax credit worth the lesser of $100,000
or his or her proportionate share, as determined by his or her ownership
interest in the donated land or interest in land, of 50 percent of the donated
land's or interest in land's fair market value.
For donations made on or after January 1, 2008, a husband and wife who
both own a recorded interest in a donated land or interest in land, as opposed
to one spouse not being named on the deed but having a community property interest,
may each receive a land conservation incentives tax credit worth the lesser of
$250,000 or his or her proportionate share, as determined by his or her
ownership interest in the donated land or interest in land, of 50 percent of
the donated land's or interest in land's fair market value.
I. The land
conservation incentives tax credit originates in the year the applicant conveys
the donation, which shall be determined by the date that the deed is recorded
with the county clerk where the land or interest in land is located. Pursuant to NMSA 1978, Section 7-1-26, an
applicant who files a tax return may amend his or her tax return and claim the
land conservation incentives tax credit for three calendar years after the
applicant has paid the tax. An applicant
may apply for the land conservation incentives tax credit and then amend the
applicant's tax return to the year the applicant conveyed the donation as long
as the applicant receives approval of the land conservation incentives tax
credit and files the amendment within the three year period provided in NMSA
1978, Section 7-1-26. The applicant may
carry over portions of the land conservation incentives tax credit that are
unused in prior taxable years for a maximum of 20 consecutive years following
the taxable year in which the applicant donated the land or interest in land
until fully expended.
J. If the
applicant donated a portion of the land or interest in land's value, but
received payment for the remaining fair market value of the land or interest in
land, the applicant may claim only the land conservation incentives tax credit
on that portion of the value that the applicant donated.
K. An applicant
claiming a tax credit pursuant to the Land Conservation Incentives Act shall
not claim a credit pursuant to a similar law for costs related to the same
donation.
L. A tax filer may
claim the land conservation incentives tax credit against the tax liability
that the Income Tax Act or the Corporate Income and Franchise Tax Act impose.
M. The amount of the
land conservation incentives tax credit a tax filer uses in a taxable year may
not exceed the amount of the individual income or corporate income tax
otherwise due.
N. A land
conservation incentives tax credit that a pass-through tax entity claims may be
used either by the pass-through tax entity if it is the tax filer on behalf of
the pass-through tax entity or by the member, manager, partner, shareholder or
beneficiary, as applicable, in proportion to the interest in the pass-through
tax entity if the income, deductions and tax liability pass through to the
member, manager, partner, shareholder or beneficiary. Either (1) the pass-through tax entity or (2)
the member, manager, partner, shareholder or beneficiary, but not both (1) and
(2) may claim the land conservation incentives tax credit for the same
donation.
[3.13.20.8 NMAC -
Rp, 3.13.20.8 NMAC, 6-16-2008]
3.13.20.9 ASSESSMENT APPLICATION:
A. An applicant who plans to apply for
a land conservation incentives tax credit shall apply for an assessment by the
energy, minerals and natural resources department of the donation the applicant
made or proposes to make for a
conservation or preservation purpose of a fee interest in land or a
less-than-fee interest in land. An applicant may submit the assessment
application to the energy, minerals and natural resources department either
prior to conveying the fee interest in land or less-than-fee interest in land
or after conveying the fee interest in land or less-than-fee interest in land. The applicant does not need to submit an
appraisal with the assessment application package.
B. An applicant may obtain an
assessment application form from the energy, minerals and natural resources
department.
C. An applicant shall submit the assessment application package, which
shall include an original and eight copies, to the energy, minerals and natural
resources department. The applicant may
submit the assessment application package in electronic format on a compact or
digital video disc or other electronic medium such as a USB flash drive,
instead of a paper original and copies, but shall provide nine copies of the
compact or digital video disc or nine of the other electronic medium.
D. The assessment
application package shall consist of an assessment application form that
contains the applicant's name, address, telephone number, e-mail address if
available and signature, with the following required attachments:
(1) a donation assessment
report that includes:
(a)
a detailed description of the donation or proposed donation including:
(i)
whether the donation or proposed donation is a fee interest in land or a
less-than-fee interest in land;
(ii)
if the donation or proposed donation is a fee interest in land, in order
to ensure that the conservation or preservation purpose is protected in
perpetuity, a description of who holds or will hold a conservation easement
that the applicant has placed or will place on the land and assurance that the
conservation easement will contain a provision that the conservation
restrictions run with the land in perpetuity and that any reserved use shall be
consistent with the conservation or preservation purpose and that separate
donees will hold the fee interest and conservation easement;
(iii) the donation or proposed donation's
conservation or preservation purpose and how the donation or proposed donation
protects that purpose in perpetuity;
(iv)
significant natural or cultural resources present on the property; and
(iv) a description of any water rights
associated with the property and whether the conservation easement or deed
requires or will require any water rights associated with the property to
remain with the property;
(b) the current property characteristics and
condition with maps showing the property's location and boundaries, directions
to the property, topography, relation to adjacent land uses and ownership (i.e. federal, tribal, state, private,
etc.) and other properties whose conservation or preservation purposes are
protected in perpetuity that are adjacent to the property or within a five mile
radius of the property;
(c)
the size of the property in acres;
(d) a description of all structures existing
on the property;
(e)
if a donation or proposed donation is a less-than-fee interest, a
description of any building envelopes including their size and exact location and
the size of the buildings allowed within each building envelope;
(f)
if a donation or proposed donation is a less-than-fee interest, a
description of the reserved rights and permitted activities that the applicant
has or plans to retain or a copy of the completed or draft conservation
easement;
(g)
if a conservation or preservation purpose is for the preservation of a
historically important land area, documentation that the donation meets the
requirements of 26 C.F.R. section 1.170A-14(d)(5); historically important land
areas include an independently significant land area that meets the national
register criteria for evaluation in 36 C.F.R section 60.4, a land area
(including related historic resources) within a registered historic district
including a building on the land area that can reasonably be considered as
contributing to the district's significance and a land area adjacent to a
property listed individually in the national register of historic places where
the land area's physical or environmental features contribute to the property's
historic or cultural integrity;
(h)
if a conservation or preservation purpose is for the preservation of a
certified historic structure, which means buildings, structures or land areas,
documentation that the structure is listed in the national register of historic
places or is located in a registered historic district and is certified by the
secretary of the interior to the secretary of treasury as being of historic
significance to the district and that the donation meets the requirements of 26
C.F.R. section 1.170A-14(d)(5);
(i)
if a conservation or preservation purpose is for the preservation of
land areas for outdoor recreation by or for the education of the general
public, a detailed description of how the conservation easement or deed will
provide for the general public's substantial and regular use;
(j)
if a conservation or preservation purpose is for the protection of a
relatively natural area, a detailed description of the vegetative cover,
wildlife use, how the property contributes to the functioning of the larger
regional ecosystem and watershed and how the conservation easement will protect
the soil, native plant cover and wildlife use of the property;
(k)
if a conservation or preservation purpose is for the preservation of
open space pursuant to a clearly delineated federal, state or local government
policy, documentation of such policy and a detailed description identifying the
significant public benefit;
(l)
if a conservation or preservation purpose is for the preservation of open
space that is not pursuant to a clearly delineated federal, state or local
government policy, a detailed description of how the conservation easement or
deed will provide for the general public's scenic enjoyment and identifying the
significant public benefit;
(m)
if a conservation or preservation purpose is for the protection of
agricultural land, a detailed description of the property's crop or animal
production potential and how the conservation easement or deed will provide for
agricultural use and the continued use of any water rights;
(n)
the results of and a description of the physical inspection of the
property the donee or proposed donee conducted for any indications of potentially
hazardous materials or activities that have or may result in environmental
contamination such as landfills, leaking petroleum storage tanks, hazardous
material containers or spills, polychlorinated biphenyl containing equipment,
asbestos insulation and abandoned mineral mining or milling facilities or other
past activities using hazardous materials and the results of and a description
of the interview the donee or proposed donee conducted with the landowner
concerning the landowner's knowledge of such potentially hazardous materials or
activities;
(2) if the donee or
proposed donee or landowner identified the potential for potentially hazardous
materials or activities in the donation assessment report, a phase I
environmental site assessment of the property and a phase II environmental site
assessment if recommended by the phase I environmental assessment;
(3) a copy of any formal
donor or donee plan for management or stewardship of the property's conservation
or preservation values;
(4) signed authorization
from the applicant that allows personnel from the energy, minerals and natural
resources department or members of the committee established pursuant to the
Natural Lands Protection Act to enter upon the land or interest in land to view
the conservation or preservation values conveyed or to be conveyed by the
applicant for the purposes of reviewing the assessment application, upon the
personnel or committee members providing the applicant with 48 hours prior
notice; and
(5) a report from the
public or private land conservation agency that has accepted or plans to accept
the donation that provides the following:
(a)
the number of fee lands held for conservation or preservation purposes
or conservation easements that the agency holds in New Mexico;
(b)
the number of acres of each fee land held for conservation or
preservation purposes or conservation easement that the agency holds in New
Mexico;
(c)
the names of board members if the agency is a private nonprofit
organization or the names of elected or appointed officials if the organization
is a public entity; and
(d)
a signed statement from the public or private conservation agency
describing its commitment to protect the donation's conservation or
preservation purposes, its resources to provide stewardship of and management
for fee lands or to enforce conservation easement restrictions and, if a
conservation easement, its resources and policies to annually monitor the
conservation easement.
E. The secretary
reviews the assessment applications in consultation with the committee
established pursuant to the Natural Lands Protection Act. The secretary initiates consultation by
sending the assessment application package to the committee members for review
and comment or by calling a meeting of the committee. The secretary, in consultation with the
committee, shall assess the donation or proposed donation, using the factors in
3.13.20.13 NMAC, to determine if the donation or proposed donation is for a
conservation or preservation purpose and will protect the conservation or
preservation purpose in perpetuity and that the resources or areas contained in
the donation or proposed donation are significant or important.
F. If the
secretary finds, contingent upon the applicant meeting the requirements in
3.13.20.10 NMAC, the completed conservation easement or deed accurately
reflecting the donation or proposed donation described in the donation
assessment report and the taxation and revenue department, property tax
division, appraisal bureau not issuing an unfavorable recommendation of the
appraisal pursuant to 3.13.20.12 NMAC, that the donation as conveyed or
proposed is for a conservation or preservation purpose and will protect the
conservation or preservation purpose in perpetuity and that the resources or
areas contained the donation or proposed donation are significant or important,
the secretary shall notify the applicant by letter that the applicant may file
an application for certification of eligibility as provided in 3.13.20.10 NMAC. In order to apply for certification of
eligibility, the applicant may not change a proposed donation, donation
assessment report or, if a proposed donation, the public or private
conservation agency to which it is making the donation after it submits the
assessment application. If the applicant
makes such changes, the applicant shall submit a new assessment application and
receive a favorable finding from the secretary before applying for
certification of eligibility.
G. The secretary
shall reject an assessment application that is not complete or correct. If the secretary rejects the assessment
application because it is incomplete or incorrect or finds that the donation or
proposed donation is not for a conservation or preservation purpose, the
donation or proposed donation may not or will not protect the conservation or
preservation purpose in perpetuity or that the resources or areas contained in
the donation or proposed donation are not significant or important, the
applicant may not submit an application for certification of eligibility for
the land conservation incentives tax credit.
The secretary's letter shall state the specific reasons why the
secretary found the assessment application incomplete or incorrect, that the
donation or proposed donation is not for a conservation or preservation
purpose, that the donation or proposed donation may not or will not protect the
conservation or preservation purpose in perpetuity or that the resources or
areas contained in the donation or proposed donation are not significant or
important.
H. If the secretary
rejects the application because it is incomplete or incorrect; or although it
is complete and correct and the donation or proposed donation is for a
conservation or preservation purpose the resources or areas contained in the
donation or proposed donation are not significant or important; or the donation
or proposed donation may not or will not protect the conservation or
preservation purpose in perpetuity, the applicant may resubmit the application
package with the complete or correct information or additional information that
addresses the requirement that the resources or areas contained in the donation
or proposed donation be significant or important or that the donation or
proposed donation protect the conservation or preservation purpose in
perpetuity. The secretary shall place
the resubmitted assessment application in the review schedule as if it were a
new assessment application.
[3.13.20.9 NMAC - N, 6-16-2008]
3.13.20.10 APPLICATION FOR CERTIFICATION OF
ELIGIBILITY:
A. An applicant who
submitted an assessment application to the energy, minerals and natural
resources department and received a finding from the secretary that the
donation or proposed donation is for a conservation or preservation purpose and
will protect that conservation or preservation purpose in perpetuity and that
the resources or areas contained in the donation or proposed donation are
significant or important may apply for certification of eligibility for a land
conservation incentives tax credit. An
applicant may not apply for certification of eligibility for a land
conservation incentives tax credit without first submitting an assessment
application pursuant to 3.13.20.9 NMAC and receiving a favorable finding from
the secretary. The applicant shall
certify in writing that the applicant has not changed the donation or proposed
donation, donation assessment report or the public or private conservation
agency to which it conveyed or planned to convey the donation since it
submitted the assessment application. If
the applicant has made such changes the applicant shall submit a new assessment
application pursuant to 3.13.20.9 NMAC and receive a favorable finding from the
secretary before applying for certification of eligibility.
B. The applicant
may obtain a land conservation incentives tax credit certification of
eligibility application form from the energy, minerals and natural resources
department.
C. An applicant
shall submit the certification of eligibility application package, which shall
include an original and eight copies of the application package, to the energy,
minerals and natural resources department.
The applicant may submit the certification of eligibility application
package in electronic format on a compact or digital video disc or other
electronic medium such as a USB flash drive, instead of a paper original and
copies, but shall provide nine copies of the compact or digital video disc or
nine of the other electronic medium. The
applicant shall certify that the information and documents included in the
application for certification of eligibility are true and correct.
D. The completed
application for certification of eligibility shall contain the applicant's
name, address, telephone number, e-mail address if available, signature,
federal employer identification number or social security number, and, if
available, the New Mexico combined reporting system (CRS) identification number
as well as the certifications, information and attachments required by
Subsections E through I of 3.13.20.10 NMAC, as applicable. If more than one taxpayer owns the donated
land or interest in land, the application shall include each taxpayer's federal
employer identification number or social security number and, if available, New
Mexico CRS identification number. The
applicant shall indicate on the application whether the applicant is a United
States citizen or resident, a United States domestic partnership, a limited
liability company, a United States domestic corporation, an estate or a
trust. If more than one taxpayer owns
the donated land or interest in land, the application shall include each
taxpayer's status.
E. The application
shall state whether the applicant made the donation as part of a bargain
sale. If the applicant made the donation
as part of a bargain sale, the application shall include the amount the
applicant received from the sale of the land or interest in land.
F. The applicant
shall certify on the certification of eligibility application that none of the
taxpayers listed on the certification of eligibility application is or was a
subsidiary, partner, manager, member, shareholder or beneficiary of a domestic
partnership, limited liability company, domestic corporation or pass-through
entity that owns or has owned the land or interest in land in the five years
preceding the date that the applicant conveyed the land or interest in
land. If an individual and a domestic
partnership, limited liability company, domestic corporation or pass-through
entity are listed as owners on the deed conveying the land or interest in land,
the applicant shall certify on the certification of eligibility application
that the individual is not a partner, manager, member, shareholder or
beneficiary of the domestic partnership, limited liability company, domestic
corporation or pass-through-entity. If
more than one domestic partnership, limited liability company, domestic
corporation or pass-through entity are listed as an owner on the deed conveying
the land or interest in land, the applicant shall certify on the certification
of eligibility application that none of the named entities is a subsidiary,
partner, manager, member, shareholder or beneficiary of any of the other
entities listed on the deed.
G. The
certification of eligibility application package shall consist of a land
conservation incentives tax credit application form, with the following
required attachments as well as any attachments required in Subsection H of
3.13.20.10 NMAC for fee donations or Subsection I of 3.13.20.10 NMAC for
less-than-fee donations:
(1) a copy of the letter
from the secretary stating that after reviewing the applicant's assessment
application that the donation or proposed donation is for a conservation or
preservation purpose and will protect the conservation or preservation purpose
in perpetuity and that the resources or areas contained in the donation or
proposed donation are significant or important;
(2) written certification
signed by the applicant that the applicant has not changed the donation or
proposed donation, donation assessment report or the public or private
conservation agency to which it conveyed or planned to convey the donation
since it submitted the assessment application;
(3) a copy of the
conservation easement or deed recorded with the county clerk of the county or
counties where the land is located, which reflects the ownership interest of
each individual or entity conveying the land or interest in land;
(4) a qualified appraisal
of the land or interest in land donated that a qualified appraiser prepared
showing the fair market value of the land or interest in land with a statement
from the appraiser that prepared the appraisal certifying that the appraisal is
a qualified appraisal and that the appraiser is a qualified appraiser;
(5) if the donation is to
a private conservation agency, a copy of that agency's 501(c)(3) certification
from the United States internal revenue service;
(6) a signed statement
from the applicant certifying that the applicant did not donate the land or
interest in land for open space for the purpose of fulfilling density
requirements to obtain subdivision or building permits;
(7) if the applicant owns
other properties within a 10 mile radius of the donated land or interest in
land, a legal description of those properties;
(8) signed authorization
from the applicant that authorizes personnel from the taxation and revenue
department, property tax division, appraisal bureau to contact the appraiser
that prepared the appraisal for the donation;
(9) if the applicant owns
the mineral interest under the land or the interest in land, a title opinion
certifying such ownership, other documentation establishing such ownership, or
a report from a professional geologist that the probability of surface mining
occurring on such property is so remote as to be negligible, and a provision in
the conservation easement or deed that prohibits any extraction or removal of
minerals by any surface mining method; methods of mining that have limited,
localized negative effects on the land and that are not irremediably
destructive of significant conservation interests may be allowed if the
secretary finds that the methods will have limited, localized negative effects
and are not irremediably destructive of significant conservation interests; and
(10) if the ownership of
the surface estate and mineral interest has been separate and remains separate,
a report, satisfactory to the secretary, from a professional geologist that the
probability of surface mining occurring on such property is so remote as to be
negligible; the secretary may have a geologist that the state employs review
the report; if the secretary finds the report unsatisfactory the secretary's
letter denying certification of eligibility shall state the reasons that the
report is unsatisfactory.
H. If the applicant
donated the land in fee, the applicant shall also include the following
attachments with the application package:
(1) a statement from the
public or private conservation agency to which the applicant donated the land,
that the applicant donated the land for conservation or preservation purposes
and the public or private conservation agency will hold the land for such
purposes;
(2) a copy of United
States internal revenue service form 8283 for the donation signed by the public
or private conservation agency; and
(3) to ensure the land
will be used in perpetuity for the purposes of the donation, documentation in
the form of a conservation easement that complies with 26 U.S.C. section 170(h)
and its implementing regulations placed on the land that contains a provision
in the conservation easement that the conservation restrictions run with the
land in perpetuity and that any reserved use shall be consistent with the
conservation or preservation purpose (separate donees must hold the fee and
conservation easement).
I. If the
applicant donated a less-than-fee interest in land, the applicant shall also include
the following attachments with the application package:
(1) a copy of United
States internal revenue service form 8283 for that donation signed by the
public or private conservation agency;
(2) a provision in the
conservation easement that identifies the donation's conservation or
preservation purpose or purposes;
(3) a provision in the
conservation easement that provides that the conveyance of the less-than-fee
interest does not and will not adversely affect contiguous landowners' existing
property rights;
(4) if a conservation or
preservation purpose is for the conservation or preservation of land areas for
outdoor recreation by or for the education of the general public, a provision
in the conservation easement that provides for the general public's substantial
and regular use;
(5) if a conservation or
preservation purpose is for the protection of a relatively natural habitat, a provision
in the conservation easement that describes the habitat;
(6) if a conservation or
preservation purpose is for the preservation of open space pursuant to a
clearly delineated federal, state or local government policy, a provision in
the conservation easement identifying such policy and identifying the
significant public benefit;
(7) if a conservation or
preservation purpose is for the preservation of open space that is not pursuant
to a clearly delineated federal, state or local government policy, a provision
in the conservation easement stating how the easement or restriction provides
for the general public's scenic enjoyment and identifies the significant public
benefit;
(8) if a conservation or
preservation purpose is for the property's continued use for irrigated
agriculture, a provision that provides that sufficient water rights will remain
with the property;
(9) a provision in the
conservation easement that the conservation restrictions run with the land in
perpetuity;
(10) a provision in the
conservation easement that any reserved use shall be consistent with the
conservation or preservation purpose;
(11) a provision in the conservation easement that
prohibits the donee from subsequently transferring the interest in land unless
the transfer is to another public or private conservation agency and the donee,
as a condition of the transfer, requires that the conservation or preservation
purposes for which the donation was originally intended continue to be carried
out;
(12) a provision in the
conservation easement that provides that the donation of the less-than-fee
interest is a property right, immediately vested in the donee, and provides
that the less-than-fee interest has a fair market value that is at least equal
to the proportionate value that the conservation restriction at the time of the
donation bears to the property as a whole at that time; the provision shall
further provide that if subsequent unexpected changes in the conditions
surrounding the property make impossible or impractical the property's
continued use for conservation or preservation purposes and judicial proceedings
extinguish the easement or restrictions then the donee is entitled to a portion
of the proceeds from the property's subsequent sale, exchange or involuntary
conversion at least equal to the perpetual conservation restriction's
proportionate value;
(l3) if the applicant
reserves rights that if exercised may impair the conservation interests
associated with the property, documentation sufficient to establish the
property's condition at the time of the donation and a provision in the
conservation easement whereby the applicant agrees to notify the public or
private conservation agency receiving the donation before exercising any
reserved right that may adversely impact the conservation or preservation
purposes; and
(14) if the interest in land is subject to a
mortgage, a subordination agreement, recorded with the county clerk of the
county or counties where the land that is located, from the mortgage holder
that it subordinates its rights in the interest in land to the right of the
public or private conservation agency to enforce the conservation or
preservation purposes of the donation in perpetuity.
[3.13.20.10 NMAC -
Rp, 3.13.20.9 NMAC, 6-16-2008]
3.13.20.11 CERTIFICATION OF ELIGIBILITY APPLICATION REVIEW PROCESS AND CERTIFICATION
OF ELIGIBLE DONATION:
A. The secretary
reviews certification of eligibility applications.
B. The secretary
shall reject a certification of eligibility application if it is incomplete or
incorrect; the applicant changed the donation or proposed donation, donation
assessment report or the public or private conservation agency to which it
conveyed or planned to convey the donation since it submitted the assessment
application; the donation does not meet the requirements of 3.13.20.8 NMAC or
3.13.20.10 NMAC; the completed conservation easement or deed does not
accurately reflect the donation the applicant described in its assessment
application; or the taxation and revenue department, property tax division,
appraisal bureau provides an unfavorable recommendation of the appraisal. The secretary's letter shall state the
specific reasons why the secretary rejected the certification of eligibility
application.
C. If the secretary
rejects the certification of eligibility application because it was incomplete
or incorrect; does not meet the requirements of 3.13.20.8 NMAC or 3.13.20.10
NMAC; the filed conservation easement or deed does not accurately reflect the
donation the applicant described in its assessment application; or the taxation
and revenue department, property tax division, appraisal bureau provides an
unfavorable recommendation of the appraisal, the applicant may resubmit the
application package for the rejected certification of eligibility application
with the complete or correct information or additional information that
addresses the requirements the donation does not meet. The secretary shall place the resubmitted
certification of eligibility application in the review schedule as if it were a
new certification of eligibility application.
D. If the secretary
rejects the certification of eligibility application because the applicant
changed the donation or proposed donation, donation assessment report or the
public or private conservation agency to which it conveyed or planned to convey
the donation since it submitted the assessment application, the applicant shall
submit a new assessment application pursuant to 3.13.20.8 NMAC.
E. The secretary
approves the certification of eligibility application if the secretary finds
the donation of land or interest in land meets the requirements of 3.13.20.8
NMAC or 3.13.20.10 NMAC; the secretary issued a favorable finding on the
applicant's assessment application and the applicant has not changed the
donation or proposed donation, donation assessment report or the public or
private conservation agency to which it conveyed or planned to convey the
donation since it submitted the assessment application; the completed
conservation easement or deed accurately reflects the donation the applicant described
in its assessment application; the donation does not adversely affect
contiguous landowners' property rights; and the taxation and revenue
department, property tax division, appraisal bureau does not issue an
unfavorable recommendation of the appraisal.
The secretary's approval is given by the issuance of a letter to the
applicant and the taxation and revenue department. This letter shall certify that the donation
of land or interest in land includes the conveyance in perpetuity, on or after
January 1, 2004, for a conservation or preservation purpose of a fee interest
in land or a less-than-fee interest in land that meets the requirements of the
Land Conservation Incentives Act; NMSA 1978, Sections 7-2-18.10 or 7-2A-8.9;
and 3.13.20 NMAC, and include a calculation of the maximum amount of the land
conservation incentives tax credit for which each taxpayer is eligible.
[3.13.20.11 NMAC -
Rp, 3.13.20.10 NMAC, 6-16-2008]
3.13.20.12 APPRAISALS:
A. Upon receiving the
certification of eligibility application, the energy, minerals and natural
resources department forwards the appraisal to the taxation and revenue
department, property tax division, appraisal bureau for review.
B. The taxation and
revenue department, property tax division, appraisal bureau shall review the
appraisal and advise the secretary whether the appraisal meets the requirements
of 3.13.20 NMAC including whether the appraisal complies with the uniform
standards of professional appraisal practice and whether the appraiser used
proper methodology and reached a reasonable conclusion concerning value. The secretary may approve certification of
eligibility without an appraisal review if the secretary determines that the
taxation and revenue department, property tax division, appraisal bureau is
unable to provide a timely review.
C. The taxation and
revenue department, property tax division, appraisal bureau's review does not
preclude further audit by the taxation and revenue department or the United States
internal revenue service.
[3.13.20.12 NMAC -
N, 6-16-2008]
3.13.20.13 FACTORS
IN DETERMINING SUITABILITY FOR CERTIFICATION OF ELIGIBILITY:
A. The donation
shall meet the following three criteria for the secretary to consider the
donation for certification eligibility:
(1) the land or interest
in land fits one or more of the descriptions of purposes in Subsection D of
3.13.20.7 NMAC;
(2) the recipient is a
public or private conservation agency with the ability and commitment to
monitor and ensure the grantor's compliance with the conservation easement or
provide stewardship of the fee land, as applicable; and
(3) the donation provides
for the protection in perpetuity of the conservation or preservation purposes
for which the applicant donated the land or interest in land through a
conservation easement.
B. In determining
an application's suitability for certification of eligibility, the secretary
considers several factors including the following:
(1) property size;
(2) property condition or
potential;
(3) presence of
significant natural or cultural resources;
(4) property's location
relative to other lands protected for conservation or preservation purposes;
(5) current and future
management and use;
(6) contribution to
local, regional or state conservation or preservation objectives;
(7) terms of the
conservation easement or deed;
(8) qualifications and
stewardship capacity of the public or private conservation agency that holds
the fee or conservation easement; and
(9) other factors affecting the property's
long-term protection and viability.
C. The secretary
also considers the criteria listed in the following table in determining
whether the resources or areas contained in the donation are significant or
important: These criteria relate to the
property's overall condition and viability as well as the compatibility of
future management and uses and surrounding land uses for maintenance of
conservation values.
|
Ranking |
Site Condition |
Development |
Uses |
Surroundings |
Stewardship or Monitoring |
|
Favorable |
Site is of
uniformly good condition and sufficient size to maintain the conservation or
preservation purposes, assuming other favorable factors such as good
potential for restoration if needed |
Additional
development of the property is specifically prohibited or additional
development that is allowed is consistent with the conservation or
preservation purposes |
Allowed uses of
the property are consistent with the conservation or preservation purposes |
Surrounding land
uses are entirely compatible with site conservation or preservation purposes,
or site serves as a connection between other conservation lands or provides
significant or important open space |
If a fee donation,
the recipient has sufficient resources as well as a formal plan to provide
stewardship for the conservation or preservation purposes. If a less-than-fee donation the recipient
has sufficient resources to monitor and ensure the grantor's compliance with
the conservation's easement's terms. |
|
Marginal |
Site is of minimum
size and condition to maintain the conservation or preservation purposes,
assuming other favorable factors |
Additional
development allowed that may impair the conservation or preservation purposes |
Allowed uses of
the property may be incompatible for long-term maintenance of the
conservation or preservation purposes |
Surrounding lands
uses are not consistent with site conservation or preservation purposes, and
site does not serve as a connection between other conservation lands or
provide significant or important open space, but surrounding land uses do not
seriously compromise site integrity |
If a fee donation,
the recipient has no formal plan and marginal capacity to provide stewardship
of the conservation or preservation purposes.
If a less-than-fee donation, the recipient has marginal resources to
monitor and ensure the grantor's compliance with the conservation's
easement's terms. |
|
Unfavorable |
Maintenance of conservation
or preservation values is severely compromised by the site's size,
configuration, location or condition |
Additional
development allowed that is inconsistent with the conservation or
preservation purposes |
Allowed uses are
clearly incompatible with the long-term maintenance of the conservation or
preservation purposes |
Surrounding land
uses are clearly incompatible with site conservation or preservation and
threaten site integrity and the site does not serve as a connection between
other conservation lands or provide significant or important open space |
If a fee donation,
the recipient has no plan or resources to provide stewardship of the
conservation or preservation purposes.
If a less-than-fee donation, the recipient has no or limited resources
to monitor and ensure the grantor's compliance with the conservation's
easement's terms. |
D. The secretary
evaluates each application in the context of the property's unique geographic
setting and characteristics, but the secretary will not apply rigid standards
relating to tract size or other factors.
Instead, the secretary evaluates the donation's overall contribution to
the indicated conservation or preservation purpose as well as the probability
the purposes will be supported in perpetuity.
[3.13.20.13 NMAC -
N, 6-16-2008]
3.13.20.14 FILING REQUIREMENTS:
A. After obtaining
a certificate of eligibility from the energy, minerals and natural resources
department, the applicant shall apply for the land conservation incentives tax
credit with the taxation and revenue department on a form the taxation and
revenue department develops. The
applicant shall attach the certificate of eligibility received from the
secretary.
B. If the applicant
complies with all the requirements in NMSA 1978, Section 7-2-18.10 or Section
7-2-8.9 and has received the certificate of eligibility from the secretary, the
taxation and revenue department shall issue a document granting the land
conservation incentives tax credit, which is numbered for identification and
includes its date of issuance and the amount of the land conservation
incentives tax credit allowed.
C. A tax filer
shall use a claim form the taxation and revenue department develops to apply
the land conservation incentives tax credit to the tax filer's income taxes. A tax filer shall submit the claim form with
its income tax return.
D. A tax filer who
has both a carryover credit and a new credit derived from a qualified donation
in the taxable year for which the tax filer is filing the return shall first
apply the amount of carryover credit against the income tax liability. If the amount of liability exceeds the
carryover credit, then the tax filer may apply the current year credit against
the liability.
E. If an applicant
claims a charitable deduction on the applicant's federal income tax for a
contribution for which the applicant also claims a tax credit pursuant to the
Land Conservation Incentives Act, the applicant's itemized deduction for New
Mexico income tax shall be reduced by the deduction amount for the contribution
to determine the applicant's New Mexico taxable income.
[3.13.20.14 NMAC -
Rp, 3.13.20.11 NMAC, 6-16-2008]
3.13.20.15 TRANSFER
OF THE LAND CONSERVATION INCENTIVES TAX CREDIT:
A. An
applicant may sell, exchange or otherwise transfer an approved land
conservation incentives tax credit, represented by the document that the
taxation and revenue department issues, for a conveyance made on or after
January 1, 2008. A land conservation
incentives tax credit or increment of a land conservation incentives tax credit
may only be transferred once. An
applicant may transfer its land conservation incentives tax credit to any tax
filer.
B. A tax filer to
whom an applicant has transferred a land conservation incentives tax credit may
use the land conservation incentives tax credit in the year that the transfer
occurred and carry forward unused amounts to succeeding taxable years, but may
not use the land conservation incentives tax credit for more than 20 years
after the taxation and revenue department originally issued it. In order to use the land conservation
incentives tax credit for that taxable year, the transfer of the land
conservation incentives tax credit must occur on or before December 31 of that
taxable year.
C. An applicant may
only transfer a land conservation incentives tax credit in increments of
$10,000 or more.
D. An applicant
shall use a qualified intermediary to transfer a land conservation incentives
tax credit. The qualified intermediary
shall notify the taxation and revenue department of the transfer and the date
of the transfer on a taxation and revenue department-developed form within 10
days following the transfer. The
qualified intermediary shall keep an account of the land conservation
incentives tax credit transferred.
E. A qualified
intermediary may issue sub-numbers registered with and obtained from the
taxation and revenue department.
F. If an
individual who owns an interest in the donated property dies prior to selling,
exchanging or otherwise transferring the land conservation incentives tax
credit, the donor's estate may sell, exchange or otherwise transfer the land
conservation incentives tax credit.
[3.13.20.15 NMAC -
N, 6-16-2008]
3.13.20.16 TRANSITION
PROVISIONS: 3.13.20 NMAC, effective on June 16, 2008,
shall apply to those applications for a land conservation incentives tax
credit, an applicant submits on or after June 16, 2008 even if the applicant
conveyed the donation prior to that date.
[3.13.20.16 NMAC -
N, 6-16-2008]
HISTORY OF
3.13.20 NMAC:
Pre-NMAC History: None.
History of
Repealed Material: 3.13.20 NMAC, Land Conservation Incentives
Tax Credit (filed 12-11-2003) repealed 6-16-2008.
NMAC History:
3.13.20 NMAC, Land Conservation Incentives Tax Credit (filed 12-11-2003)
was replaced by 3.13.20 NMAC, Land Conservation Incentives Tax Credit,
effective 6-16-2008.