0001| SENATE BILL 341
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0002| 43RD LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 1998
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0003| INTRODUCED BY
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0004| JOHN ARTHUR SMITH
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0005|
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0006|
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0007|
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0008|
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0009|
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0010| AN ACT
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0011| RELATING TO REVENUE; AMENDING SECTION 7-36-4 NMSA 1978 (BEING
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0012| LAWS 1976, CHAPTER 61, SECTION 1, AS AMENDED) TO ENSURE
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0013| TAXATION OF FRACTIONAL INTERESTS IN REAL PROPERTY.
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0014|
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0015| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
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0016| Section 1. Section 7-36-4 NMSA 1978 (being Laws 1976,
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0017| Chapter 61, Section 1, as amended) is amended to read:
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0018| "7-36-4. FRACTIONAL PROPERTY
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0019| INTERESTS--DEFINITIONS TAXATION AND VALUATION OF FRACTIONAL
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0020| INTERESTS.--
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0021| A. As used in this section:
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0022| (1) "fractional interest" means a tangible
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0023| interest in real property, except for mineral property as
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0024| defined in Section 7-36-22 NMSA 1978, that is less than the
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0025| total of the interests existing in the property, but
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0001| "fractional interest" does not include those property
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0002| interests described in Sections 7-36-3, 7-36-3.1 and
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0003| 7-36-3.2 NMSA 1978 nor does it include the lessee's interest
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0004| under a lease when the term of the lease is more than
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0005| seventy-five years;
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0006| (2) "exempt entity" means any person whose
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0007| real property is exempt from taxation under the constitution
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0008| of New Mexico or the Enabling Act (36 Stat. 557, as amended)
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0009| by reason of ownership;
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0010| (3) "exempt property" means property that is
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0011| exempt from property taxation pursuant to Article 8, Section 3
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0012| of the constitution of New Mexico;
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0013| [(3)] (4) "improvements" includes surface
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0014| and subsurface structures, fixtures, transmission lines,
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0015| pipelines and other works, but "improvements" does not
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0016| include:
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0017| (a) that property either included or
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0018| specifically excluded under the terms "property used in
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0019| connection with mineral property" under Section 7-36-23 NMSA
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0020| 1978, "property used in connection with potash mineral
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0021| property" under Section 7-36-24 NMSA 1978 and "property used
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0022| in connection with uranium mineral property" under Section
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0023| 7-36-25 NMSA 1978;
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0024| (b) a dwelling occupied by a low-income
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0025| resident in a housing project authorized under the provisions
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0001| of the Municipal Housing Law; and
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0002| (c) those property interests described
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0003| in Sections 7-36-3, 7-36-3.1 and 7-36-3.2 NMSA 1978; [and
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(4)] (5) "nonexempt entity" means any
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0005| person that is not an exempt entity; and
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0006| (6) "nonexempt property" means property that
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0007| is not exempt property.
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0008| B. Fractional interests of nonexempt entities in
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0009| real property of exempt entities are exempt from property
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0010| taxation under the Property Tax Code, but this exemption shall
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0011| not apply to the following property:
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0012| (1) improvements of land of an exempt entity
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0013| if the improvements are owned or leased by a nonexempt entity;
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0014| these improvements are [hereby subjected] subject to
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0015| valuation for property taxation purposes and to property
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0016| taxation to be paid by the nonexempt entity; and
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0017| (2) property interests of nonexempt entities
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0018| held under equitable title in the property of exempt entities.
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0019| C. When an owner creates and transfers a
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0020| fractional interest in property that results in the
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0021| transferred interest or the retained interest becoming tax-
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0022| exempt property because of its use or its ownership, the owner
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0023| of the nonexempt property shall report the transfer to the
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0024| appropriate valuation authority and it shall be valued for
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0025| property taxation purposes. The value of the nonexempt
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0001| property shall be its value determined for the tax year
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0002| immediately preceding the tax year in which the transfer
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0003| occurs less any decrease and plus any increase in value
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0004| directly attributable to the creation of the fractional
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0005| interest that is tax-exempt property."
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