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HOUSE BILL 506
57
TH LEGISLATURE
-
STATE
OF
NEW
MEXICO
-
FIRST SESSION
,
2025
INTRODUCED BY
Art De La Cruz and Luis M. Terrazas and Doreen Y. Gallegos
and Mark Duncan
AN ACT
RELATING TO TAXATION; CREATING THE HOTEL RENOVATION INCOME TAX
CREDIT AND THE HOTEL RENOVATION CORPORATE INCOME TAX CREDIT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. A new section of the Income Tax Act is enacted
to read:
"[NEW MATERIAL] HOTEL RENOVATION INCOME TAX CREDIT.--
A. A taxpayer who is not a dependent of another
individual and who, beginning on the effective date of this
section and prior to January 1, 2035, incurs qualifying costs
for a hotel renovation project may claim a credit against the
taxpayer's tax liability imposed pursuant to the Income Tax
Act. The tax credit provided by this section may be referred
to as the "hotel renovation income tax credit".
B. The credit provided by this section shall be in
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an amount equal to the following percentages of qualifying
costs incurred by a taxpayer for a hotel renovation project:
(1) thirty percent of qualifying costs for a
hotel that receives a certification level of LEED-NC silver; or
(2) twenty percent of qualifying costs.
C. Prior to beginning a hotel renovation project, a
taxpayer shall apply for pre-certification from the tourism
department, on forms and in the manner prescribed by the
tourism department. The application shall include a proposal
for the hotel renovation project, including a detailed
description of the project, projected costs, the expected
beginning and completion dates and a hotel renovation project
plan, including phases of construction, if any. If the tourism
department determines that the projected costs are likely to
meet the requirements for qualifying costs, it shall issue a
pre-certification to the taxpayer; provided that pre-
certification received pursuant to this subsection shall not
mean that the actual costs for the hotel renovation project
will be approved for a credit provided by this section.
D. Within one calendar year of completion of a
hotel renovation project, the taxpayer shall apply for
certification of eligibility from the tourism department on
forms and in the manner prescribed by the tourism department
and including an affidavit from a certified public accountant
verifying that the qualifying costs were incurred by the
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taxpayer and meet the requirements of this section. The
aggregate amount of credits that may be certified as eligible
in a calendar year is thirty million dollars ($30,000,000).
Completed applications shall be considered in the order
received. If a taxpayer is eligible for the credit, a dated
certificate of eligibility shall be issued to the taxpayer
providing the amount of credit for which the taxpayer is
eligible; provided that applications for certification received
after the limitation on the aggregate amount of credits has
been met in a calendar year shall not be approved.
E. That portion of approved credit claimed by a
taxpayer that exceeds the taxpayer's income tax liability in
the taxable year in which the credit is claimed may be carried
forward for five consecutive taxable years.
F. Married individuals filing separate returns for
a taxable year for which they could have filed a joint return
may each claim only one-half of the credit that would have been
claimed on a joint return.
G. A taxpayer may be allocated the right to claim
the credit provided by this section in proportion to the
taxpayer's ownership interest if the taxpayer owns an interest
in a business entity that is taxed for federal income tax
purposes as a partnership or limited liability company and that
business entity has met all of the requirements to be eligible
for the credit. The total credit claimed by all members of the
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partnership or limited liability company shall not exceed the
allowable credit pursuant to this section.
H. A taxpayer allowed a credit pursuant to this
section shall report the amount of the credit to the taxation
and revenue department on a form and in a manner required by
the department.
I. The credit provided by this section shall be
included in the tax expenditure budget pursuant to Section
7-1-84 NMSA 1978, including the annual aggregate cost of the
credit.
J. As used in this section:
(1) "hotel" means a building in New Mexico:
(a) where, for consideration, lodging is
regularly furnished to the general public; and
(b) that provides at least fifteen guest
rooms or suites for overnight guest use;
(2) "hotel renovation project" means the
restoration, renovation and rehabilitation of at least forty
percent of the guest rooms or suites of a hotel. "Hotel
renovation project" does not mean new construction;
(3) "LEED-NC silver" means the rating in
compliance with, or exceeding, the third-highest rating awarded
by the LEED certification process for new buildings and major
renovations. As used in this paragraph, "LEED" means the most
current leadership in energy and environmental design green
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building rating system guidelines developed and adopted by the
United States green building council; and
(4) "qualifying costs" means costs incurred by
the taxpayer:
(a) for planning, designing,
construction and construction-related equipment for the
restoration, renovation and rehabilitation of a hotel;
(b) in an amount equal to or greater
than: 1) twenty-five thousand dollars ($25,000) in a county
with a population of fifteen thousand or less according to the
most recent federal decennial census; or 2) forty thousand
dollars ($40,000) in a county with a population greater than
fifteen thousand according to the most recent federal decennial
census; and
(c) that shall not include any amount
for which a tax credit pursuant to the federal new markets tax
credit has been claimed pursuant to Section 45D of the Internal
Revenue Code, as that section may be amended or renumbered."
SECTION 2. A new section of the Corporate Income and
Franchise Tax Act is enacted to read:
"[NEW MATERIAL] HOTEL RENOVATION CORPORATE INCOME TAX
CREDIT.--
A. A taxpayer that, beginning on the effective date
of this section and prior to January 1, 2035, incurs qualifying
costs for a hotel renovation project may claim a credit against
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the taxpayer's tax liability imposed pursuant to the Corporate
Income and Franchise Tax Act. The tax credit provided by this
section may be referred to as the "hotel renovation corporate
income tax credit".
B. The credit provided by this section shall be in
an amount equal to the following percentages of qualifying
costs incurred by a taxpayer for a hotel renovation project:
(1) thirty percent of qualifying costs for a
hotel that receives a certification level of LEED-NC silver; or
(2) twenty percent of qualifying costs.
C. Prior to beginning a hotel renovation project, a
taxpayer shall apply for pre-certification from the tourism
department, on forms and in the manner prescribed by the
tourism department. The application shall include a proposal
for the hotel renovation project, including a detailed
description of the project, projected costs, the expected
beginning and completion dates and a hotel renovation project
plan, including phases of construction, if any. If the tourism
department determines that the projected costs are likely to
meet the requirements for qualifying costs, it shall issue a
pre-certification to the taxpayer; provided that pre-
certification received pursuant to this subsection shall not
mean that the actual costs for the hotel renovation project
will be approved for a credit provided by this section.
D. Within one calendar year of completion of a
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hotel renovation project, the taxpayer shall apply for
certification of eligibility from the tourism department on
forms and in the manner prescribed by the tourism department
and including an affidavit from a certified public accountant
verifying that the qualifying costs were incurred by the
taxpayer and meet the requirements of this section. The
aggregate amount of credits that may be certified as eligible
in a calendar year is thirty million dollars ($30,000,000).
Completed applications shall be considered in the order
received. If a taxpayer is eligible for the credit, a dated
certificate of eligibility shall be issued to the taxpayer
providing the amount of credit for which the taxpayer is
eligible; provided that applications for certification received
after the limitation on the aggregate amount of credits has
been met in a calendar year shall not be approved.
E. That portion of approved credit claimed by a
taxpayer that exceeds the taxpayer's income tax liability in
the taxable year in which the credit is claimed may be carried
forward for five consecutive taxable years.
F. A taxpayer allowed a credit pursuant to this
section shall report the amount of the credit to the taxation
and revenue department on a form and in a manner required by
the department.
G. The credit provided by this section shall be
included in the tax expenditure budget pursuant to Section
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7-1-84 NMSA 1978, including the annual aggregate cost of the
credit.
H. As used in this section:
(1) "hotel" means a building in New Mexico:
(a) where, for consideration, lodging is
regularly furnished to the general public; and
(b) that provides at least fifteen guest
rooms or suites for overnight guest use;
(2) "hotel renovation project" means the
restoration, renovation and rehabilitation of at least forty
percent of the guest rooms or suites of a hotel. "Hotel
renovation project" does not mean new construction;
(3) "LEED-NC silver" means the rating in
compliance with, or exceeding, the third-highest rating awarded
by the LEED certification process for new buildings and major
renovations. As used in this paragraph, "LEED" means the most
current leadership in energy and environmental design green
building rating system guidelines developed and adopted by the
United States green building council; and
(4) "qualifying costs" means costs incurred by
the taxpayer:
(a) for planning, designing,
construction and construction-related equipment for the
restoration, renovation and rehabilitation of a hotel;
(b) in an amount equal to or greater
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than: 1) twenty-five thousand dollars ($25,000) in a county
with a population of fifteen thousand or less according to the
most recent federal decennial census; or 2) forty thousand
dollars ($40,000) in a county with a population greater than
fifteen thousand according to the most recent federal decennial
census; and
(c) that shall not include any amount
for which a tax credit pursuant to the federal new markets tax
credit has been claimed pursuant to Section 45D of the Internal
Revenue Code, as that section may be amended or renumbered."
SECTION 3. APPLICABILITY.--The provisions of this act
apply to taxable years beginning on or after January 1, 2025.
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