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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0004|                    (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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0006|                              
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