Hotel Renovation Tax Credit
If enacted, SB403 will amend the Income Tax Act and the Corporate Income and Franchise Tax Act to include these new tax credits, effective for qualifying projects begun before January 1, 2033. The total amount of credits available for certification within a calendar year is capped at $30 million, and any portion of the credit exceeding the taxpayer's tax liability can be carried forward for up to five years. This structure is intended to incentivize hotel owners to invest in upgrades and improvements, aiding in job retention and economic development in New Mexico's tourism industry.
Senate Bill 403 proposes the introduction of the Hotel Renovation Income Tax Credit and the Hotel Renovation Corporate Income Tax Credit in the state of New Mexico. The bill is designed to promote the rehabilitation and renovation of hotels, with the goal of fostering economic growth within the tourism sector. To qualify for the tax credits, a hotel must incur specific qualifying costs for renovations that adhere to the guidelines set forth in the legislation. The credits available are 30% for projects achieving LEED-NC silver certification and 20% for other qualifying projects, provided the renovations reach a significant threshold of hotel room rehabilitation.
During discussions of the bill, some stakeholders voiced concerns regarding the sustainability of state finances given the significant tax credits being offered. Critics of the bill worried that the monetary benefits could disproportionately favor certain hotel chains over smaller, independent establishments. Additionally, the requirements for pre-certification with the tourism department could introduce administrative burdens, potentially complicating access to the benefits intended for both large and small hotel operators.