Committee Substitute for HB0884BIS

HOUSE BUSINESS AND INDUSTRY COMMITTEE SUBSTITUTE FOR

HOUSE BILL 884

47th legislature - STATE OF NEW MEXICO - second session, 2006

AN ACT

RELATING TO THE PUBLIC PEACE, HEALTH, SAFETY AND WELFARE; PROVIDING FOR INCOME TAX AND CORPORATE INCOME TAX CREDITS FOR CONSTRUCTION OF GREEN BUILDINGS.

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] INCOME TAX--CREDIT FOR INCREMENTAL COSTS OF CONSTRUCTION OF GREEN BUILDINGS.--

A. To encourage the construction of green buildings, a taxpayer who files an individual New Mexico income tax return and who is not a dependent of another taxpayer may claim a credit in an amount equal to the incremental cost incurred by the taxpayer in the taxable year for which the credit is claimed or in the year prior to the taxable year for which the credit is claimed for the construction in New Mexico of a green building owned by the taxpayer.

B. For the purposes of this section:

(1) "green building" means a building that is designed and constructed to significantly reduce or eliminate the negative impact of the built environment on:

(a) site conservation and sustainable planning;

(b) water conservation and efficiency;

(d) conservation of materials and resources; or

(e) indoor environmental quality and human health;

(2) "incremental cost" means the additional cost, above the cost of construction to usual industry standards, required to construct a building to the standards required to achieve a silver rating in the LEED green building rating system; and

(3) "LEED green building rating system" 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.

C. To be eligible for the credit, the taxpayer must provide to the department, in a form to be determined by the department, the following information relating to the building with respect to which the tax credit is being claimed:

(1) verification from the energy, minerals and natural resources department that the building has achieved LEED certification of at least a silver rating in the LEED green building rating system;

(2) information from the construction industries division of the regulation and licensing department estimating the cost for construction to usual industry standards of a substantially similar building; and

(3) evidence of the costs incurred by the taxpayer for construction of the building.

D. The credit provided by this section may be deducted from the taxpayer's income tax liability for the taxable year in which the credit is claimed. If the amount of the credit exceeds the taxpayer's income tax liability, the excess credit may be carried forward for up to five years.

E. A taxpayer who otherwise qualifies to claim a credit pursuant to this section and who is a member of a partnership, S corporation or business association that is the owner of the building with respect to which the credit is being claimed may claim a credit only in proportion to the taxpayer's interest in the partnership, S corporation or business association.

F. A husband and wife who file separate returns for a taxable year in which they could have filed a joint return may each claim only one-half of the credit that would have been allowed on a joint return."

Section 2. A new section of the Corporate Income and Franchise Tax Act is enacted to read:

"[NEW MATERIAL] CORPORATE INCOME TAX--CREDIT FOR INCREMENTAL COSTS OF CONSTRUCTION OF GREEN BUILDINGS.--

A. To encourage the construction of green buildings, a taxpayer that files a corporate income tax return may claim a credit in an amount equal to the incremental cost incurred by the taxpayer in the taxable year for which the credit is claimed or in the year prior to the taxable year for which the credit is claimed for the construction in New Mexico of a green building owned by the taxpayer.

B. For the purposes of this section:

(1) "green building" means a building that is designed and constructed to significantly reduce or eliminate the negative impact of the built environment on:

(a) site conservation and sustainable planning;

(b) water conservation and efficiency;

(d) conservation of materials and resources; or

(e) indoor environmental quality and human health;

(1) verification from the energy, minerals and natural resources department that the building has achieved LEED certification of at least a silver rating in the LEED green building rating system;

(3) evidence of the costs incurred by the taxpayer for construction of the building.

D. The credit provided by this section may be deducted from the taxpayer's corporate income tax liability for the taxable year in which the credit is claimed. If the amount of the credit exceeds the taxpayer's corporate income tax liability, the excess credit may be carried forward for up to five years.

E. A taxpayer that otherwise qualifies to claim a credit pursuant to this section and that is a member of a partnership, limited liability corporation or business association that is the owner of the building with respect to which the credit is being claimed may claim a credit only in proportion to the taxpayer's interest in the partnership, limited liability corporation or business association."

Section 3. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2006.

- 6 -