The State of New Mexico Investment Tax Credit program was created on January 1, 1984. The state income tax credit is available to owners of historic structures who accomplish qualified, rehabilitation on a structure or stabilization or protection of an archaeological site. It is a two-part process. State applications are available on-line in MS Word format or from the office. Criteria of the program are:

• Property must be individually listed in, or contributing to a historic district listed in the State Register of Cultural Properties. The property may be a personal residence, income-producing property (such as an apartment building or office), or an archaeological site.
• The State Cultural Properties Review Committee (CPRC) must approve the proposed rehabilitation work prior to the beginning of the project. The work will conform to the guidelines in the regulation NMAC 4.10.9 (PDF format) as interpreted by the CPRC. All parts of the project must be described in Part 1 of the application, including those items wherein costs may not be eligible toward credit, e.g. a new addition to the structure.
• The project term expires 24 months from the date of the Part 1 approval. New Part for portions of uncompleted work from previous applications, as long as the project maximum has not been reached.
• The completed project must be documented in Part 2 of the application and presented to the CPRC for certification. Project expenses must be fully documented and submitted the application.
• Each program project carries a maximum of $50,000, although the project costs may exceed this amount.
• Maximum credit is 50% of eligible costs of the approved rehabilitation or $25,000 (50% of project maximum) or 5 years of tax liability, whichever is least. The credit is applied against New Mexico income taxes owed in the year the project is completed and the balance may be carried forward for up to four additional years.

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Who is eligible for the program?
An applicant must meet the following qualifications:

• Own or lease a property that is listed on the State Register of Cultural Properties or is a contributing property to a historic district that is listed in the Register. (Contact the Historic Preservation Division in Santa Fe, (505)827-6320, to find out if your property meets this requirement.)
• Apply to the program and perform a rehabilitation project that was approved by the Cultural Properties Review Committee prior to the beginning of construction.

How much money can I actually save?
This depends on your annual state income tax liability and the amount of money that you spend on the restoration, rehabilitation or preservation of your property.

In general, the program grants an amount equal to 50% of approved expenses toward income tax credit.

However, the program limits allowable expenses to $50,000 for any single project, limiting the credit to $25,000, even though costs to rehabilitate may exceed this figure.

The credit may be used for a total of five years. Once the project is certified as a qualified rehabilitation and expenses/credit amount is established, the applicant may use the tax credit for the year in which funds were expended. Any remaining credit amount may be carried forward for four more years. If the total amount of credit cannot be utilized within five consecutive tax years, the surplus is forfeited.

What kind of work qualifies for the credit?
All work must conform to the Secretary of the Interior's Standards for Rehabilitation and program regulations NMAC 4.10.9. The CPRC must approve the work plan before any construction begins. Typical work items whose costs may be eligible for credit are:

• New roofing or repairing roofing, eaves and fascia
• Repairing deteriorated woodwork
• Stabilizing foundation and structural elements
• Repairing windows
• Restoring interior and exterior finishes
• Repairing or replacing utility services to conform to applicable code requirements

Costs for items like interior furnishings, new construction, minor repairs and demolition are not generally eligible toward tax credit.

What if I construct an addition to my house—can I still get receive tax credits?
Possibly, if the addition is part of a larger rehabilitation project. An entire project—all construction that will take place over a 24-month period—must be reviewed. The CPRC reviews the project for its effect on the historic characteristics of the building and determines which costs would be eligible to credit. For instance, a project that includes a new addition at the rear of a house and repair of exterior woodwork on the original historic house could be approved by the CPRC. Costs of the woodwork repair could be eligible toward credit, however the costs of the new addition would not be eligible.

Are archaeological sites eligible for the tax credit?
Yes, if the site is listed on the State Register of Cultural Properties. The owner or lessee may claim the credit for pre-approved stabilization, protective maintenance or fencing. The project must comply with all requirements of the program, including the completion and approvals of applications.

The cost of excavating an archaeological site is not eligible for the credit program, since this is not considered restoration, preservation or rehabilitation. The CPRC does not discourage excavation by qualified individuals. However, it strongly recommends that the owner/lessee of an archaeological site contact the Committee prior to any excavation. Improper excavation may be cause for removing a site from the State Register.

How do I apply for the State Income Tax Credit?
Download an application through the website (MS Word format) or obtain one from the HPD office. Complete the form according to the instructions. Send the application to HPD at least 2 weeks prior to a meeting of the Cultural Properties Review Committee (CPRC) for action at the meeting.

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Under several Tax Reform Acts and the Economic Recovery Act, the National Park Service administers the Federal Investment Tax Credit Program in cooperation with the State Historic Preservation Office. It is a three-part application process. Participation in the program is initiated with the State Historic Preservation Office in Santa Fe. Criteria of the program are:

• Property must be individually listed in, or contributing to a historic district listed in the National Register of Historic Places. In some cases the property may be determined eligible for listing, but has not been listed at the time of the rehabilitation project. The significance of the property is described in Part 1 of the application.
• The eligible expenses of a rehabilitation project must be at least equal to the adjusted basis of the property.
• The project must be an income producing property, not a personal residence.
• Rehabilitation work must be fully described in the Part 2 application. The work will conform to the Secretary of the Interior's Standards for Rehabilitation as interpreted by the National Park Service.
• The project term expires 24 months from the date of the Part 1 approval, or 60 months if the project is phased.
• After completion, the rehabilitation work must be fully documented in the final portion of the application and certified by the National Park Service.
• The program generally allows up to 20% of the eligible costs of rehabilitation work to be credited against Federal income taxes. The credit is applied against federal income taxes owed in the year the project is completed, carried backward 1 year and forward for twenty years. Some provisions of the Internal Revenue Service Code may affect a taxpayer's ability to utilize the full credit. Taxpayers should seek professional advice concerning their specific circumstances.

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