Sustainable Building Tax Credit (SBTC)

Sustainable Building Tax Credit (SBTC)

ECMD manages the Sustainable Building Tax Credit (SBTC) which benefits New Mexicans by incentivizing builders to build energy-efficient and healthy, comfortable homes. Homeowners who live in energy-efficient homes are saving up to 40 percent on their utility bills annually – money that goes back into local communities. The commercial tax credit has generated even larger savings.

The following graph shows the number and percentage of certificates issued for platinum projects from 2015 to 2021.

In the 2021 Legislative Session, the New Mexico state legislature amended the Sustainable Building Tax Credit (SBTC) to more accurately reflect the state’s intention to incentivize cutting-edge sustainable building practices. The 2021 SBTC goes into effect on January 1, 2021 for existing building energy conserving retrofits and April 1, 2023 for the construction of new buildings, and sunsets on January 1, 2030. (Until April 1, 2023, projects may qualify under the old Sustainable Building Tax Credit schema, if they are completed before that date and the credit is claimed by December 31, 2024.)

The 2021 Sustainable Building Tax Credit requires a higher level of LEED (Leadership in Energy and Environmental Design) certification to qualify a project. In addition, the 2021 credit provides bonuses for a fully electric house, and/or for meeting net-zero carbon certification, zero energy certification, zero waste certification or zero water certification. The 2021 credit also scales up for low-income persons and affordable housing projects.

A new part of the 2021 credit is the provision of tax credits for the installation of energy-conserving products in existing commercial and residential buildings – helping to improve extant building stock in New Mexico. This part of the 2021 credit goes into effect on January 1, 2021. To support adoption of electric vehicle usage in New Mexico, a tax incentive is now available for electric vehicle (EV) ready buildings. Starting on January 1, 2021, New Mexico will provide a tax incentive for EV charging in residential and commercial buildings through the 2021 SBTC for both existing and new construction of buildings that are EV ready. The incentive provides for both affordable and non-affordable housing, with commercial and residential affordable buildings qualifying for 100% of the product cost up to $3,000 with non-affordable building eligibility cut to 50% and limited to $1,500.

The 2021 Sustainable Building Tax Credit can be sold, transferred, or carried forward for seven tax years. The credit is refundable for low-income taxpayers who have exceeded their income tax liability.

The Energy, Minerals and Natural Resources Department (EMNRD) is the designated agency which approves the 2021 Sustainable Building Tax Credit and issues certifications which can be submitted along with tax returns. Each year, EMNRD will issue certifications up to a yearly cap, by category of project. EMNRD has some flexibility in dividing up the category caps: if a category’s cap is not reached in a particular year, that money can be redistributed into other categories, allowing for more certifications. The New Mexico Taxation and Revenue Department continues to administer the refunds or credits as part of the tax return process.

The following table shows the dollar amount of credits available by category per year, adding up to an aggregate amount of $7.15 million for the 2021 Sustainable Buildings Tax Credit, up from $5 million from the 2015 version of the credit.

2015 New Sustainable Building Tax Credit Rule

ECMD accepts an electronic submission of a combined pdf of SBTC forms. Apply here.

Rules

Four sets of rules for the 2015 New Sustainable Building Tax Credit program have been published in the December 30, 2015 edition of the New Mexico Register, pages 1049 – 1069 and are in effect.

The rules are as follows:

• Residential Corporate Income Tax Rule
• Commercial Corporate Income Tax Rule
• Residential Personal Income Tax Rule
• Commercial Personal Income Tax Rule

Building Code Requirements

For commercial projects, certification is required by the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) rating system. For residential projects, certification is required by either LEED or the Build Green New Mexico rating system. ENERGY STAR manufactured homes are also eligible for the tax credit. All projects must substantially reduce energy consumption for the new or renovated building. The amount of the tax credit is based on the qualified occupied square footage of the building and the sustainable building rating achieved, and is available for either the Personal Income Tax (PIT) or the Corporate Income Tax (CIT).

How to Apply

For Commercial Buildings

Before applying for an SBTC for a commercial building, the applicant must first file a SBTC request, using the request form (below). This should be done as early in the project cycle as possible, but not before the project has been registered with the U.S. Green Building Council. Mail the request form and all required attachments listed on the form to:

SBTC

EMNRD – ECMD

1220 S. St. Francis Drive

Santa Fe, New Mexico 87505

For Commercial and Residential Buildings

Once the building is constructed and all required certifications and documentation are available, complete the appropriate SBTC Application form (below). If you want ECMD to forward the Certificate of Eligibility and the Taxation and Revenue Department’s (TRD) Sustainable Building Tax Credit Approval form to Taxation and Revenue upon approval, include a completed and signed RPD 41382 Tax Credit Approval Form with your application package. Mail the application form and all required attachments listed on the form to:

SBTC

EMNRD – ECMD

1220 S. St. Francis Drive

Santa Fe, New Mexico 87505

ECMD will send the original Certificate of Eligibility to the applicant and a copy to TRD. Although ECMD offers the courtesy of sending the approval to TRD, it is the applicant’s responsibility to assure that TRD receives the required forms.

You may find TRD’s guidance on the tax credit useful. Click here for a copy.

Other forms that may prove useful include:

• RPD 41382 Tax Credit Approval Form
• RPD 41382 Instructions
• RPD 41383  Tax Credit Claim Form
• RPD 41383 Instructions
• RPD 41384  Transfer Form
• RPD 41384  Instructions

The following forms (two for commercial and one for residential) are Microsoft Word documents that allow you to fill in the fields on your computer. Download the forms by right-clicking on a PC or control-clicking on a Mac and selecting the “Save Target As…” option. After saving the form on your computer, you can open it and tab to each field to enter the information. As you tab through the fields, instructions for each field will appear at the bottom of the Microsoft Word window. The fields will expand as needed. The second page of the form shows the attachments that are required with the application package. Click the boxes to indicate which attachments are being submitted.

• SBTC Request Form –  Commercial
• SBTC Application Form – Commercial
• SBTC Application Form – Residential