Summary:

 House Bill 472 (HB 472) creates the Abandoned Building Revitalization Corporate Income Tax Credit. It provides a credit against corporate income tax liability for businesses that incur rehabilitation expenses for abandoned buildings in New Mexico. The credit is equal to 25% of eligible rehabilitation expenses, with a maximum credit of $700 thousand per taxpayer. The total amount of credits available in a calendar year is capped at $20 million. The bill applies to taxable years beginning on or after January 1, 2025, and is repealed effective January 1, 2037.
 

Legislation Overview:

 House Bill 472 (HB 472) establishes a new corporate income tax credit for businesses that rehabilitate abandoned buildings in New Mexico. The credit is set at 25% of eligible rehabilitation expenses, up to a maximum of $700 thousand per taxpayer. To qualify, rehabilitation expenses must fall within 80% to 125% of the estimated costs stated in a notice of intent submitted before beginning the project. Businesses seeking the credit must first obtain pre-certification from the Economic Development Department, which reviews projected costs to determine preliminary eligibility. After completing the rehabilitation, businesses must apply for final certification, including an affidavit from a certified public accountant verifying expenses.

The total amount of credits available statewide each calendar year is limited to $20 million, with applications reviewed in the order they are received. If the annual limit is reached, additional applications will not be approved for that year. The tax credit is transferable, meaning businesses can sell or transfer it to other taxpayers for its full value. If a taxpayer’s credit exceeds their corporate income tax liability in the year it is claimed, the excess may be carried forward for up to five years. The credit is required to be included in the state’s annual tax expenditure budget report. HB 472 applies to taxable years beginning on or after January 1, 2025, and includes a delayed repeal, with the credit expiring on January 1, 2037.

Implications

HB 472 incentivizes investment in abandoned properties, aiming to spur economic development and revitalize underutilized spaces in New Mexico. By offering a refundable tax credit, the bill may encourage businesses to invest in commercial and industrial properties that would otherwise remain vacant. The requirement for pre-certification and post-completion verification helps ensure that funds are used appropriately and that rehabilitation efforts meet specified standards. However, limiting the total credits available to $20 million annually may create competition among applicants, potentially disadvantaging smaller businesses if applications are approved on a first-come, first-served basis. The credit’s transferability allows businesses to monetize the incentive, which could increase its appeal but also lead to complexities in tracking ownership and compliance. The long-term fiscal impact will depend on how many businesses utilize the credit and whether the resulting economic activity offsets potential revenue losses from reduced corporate income tax collections.
 

Current Law:

 Under current law, New Mexico does not offer a corporate income tax credit specifically for the rehabilitation of abandoned buildings. Businesses undertaking such projects must rely on existing incentives, such as general business tax deductions or local economic development programs. The Economic Development Department administers other business tax credits but does not currently oversee a pre-certification process for rehabilitation projects tied to corporate tax credits.