Section 7-36-4 - Fractional property interests; definitions; taxation and valuation of fractional interests. - New Mexico Statutes

7-36-4. Fractional property interests; definitions; taxation and valuation of fractional interests.

A.     As used in this section:   

(1)     "fractional interest" means a tangible interest in real property, except for mineral property as defined in Section 7-36-22 NMSA 1978, that is less than the total of the interests existing in the property, but "fractional interest" does not include those property interests described in Sections 7-36-3, 7-36-3.1 and 7-36-3.2 NMSA 1978 nor does it include the lessee's interest under a lease when the term of the lease is more than seventy-five years;   

(2)     "exempt entity" means any person whose real property is exempt from taxation under the constitution of New Mexico or the Enabling Act (36 Stat. 557, as amended) by reason of ownership;   

(3)     "exempt property" means property that is exempt from property taxation pursuant to Article 8, Section 3 of the constitution of New Mexico by reason of use;   

(4)     "improvements" includes surface and subsurface structures, fixtures, transmission lines, pipelines and other works, but "improvements" does not include:   

(a)     that property either included or specifically excluded under the terms "property used in connection with mineral property" under Section 7-36-23 NMSA 1978, "property used in connection with potash mineral property" under Section 7-36-24 NMSA 1978 and "property used in connection with uranium mineral property" under Section 7-36-25 NMSA 1978;   

(b)     a dwelling occupied by a low-income resident in a housing project authorized under the provisions of the Municipal Housing Law [3-45-1 NMSA 1978]; and   

(c)     those property interests described in Sections 7-36-3, 7-36-3.1 and 7-36-3.2 NMSA 1978;   

(5)     "nonexempt entity" means any person that is not an exempt entity; and   

(6)     "nonexempt property" means property that is not exempt property.   

B.     Fractional interests of nonexempt entities in real property of exempt entities are exempt from property taxation under the Property Tax Code [Articles 35 to 38 of Chapter 7 NMSA 1978], but this exemption shall not apply to the following property:   

(1)     improvements of land of an exempt entity if the improvements are owned or leased by a nonexempt entity; these improvements are subject to valuation for property taxation purposes and to property taxation to be paid by the nonexempt entity; and   

(2)     property interests of nonexempt entities held under equitable title in the property of exempt entities.   

C.     When fractional interests are created in property:   

(1)     fractional interests that are nonexempt property shall be reported to the appropriate valuation authority by the fractional interest owners for valuation for property tax purposes if the owner is a nonexempt entity; and   

(2)     except for fractional interests owned by the United States, an Indian nation, tribe or pueblo, the state of New Mexico or a political subdivision of the state, fractional interests that are owned by a nonexempt entity but are claimed to be exempt property shall be reported by the owner to the appropriate valuation authority for a determination of exemption status and valuation if determined to be nonexempt property.   

D.     Fractional interests that are nonexempt property shall be valued by the applicable method of valuation pursuant to the Property Tax Code, and if fractional interests that are exempt property have been created, the value of the remaining nonexempt fractional interests shall be determined in the property tax year following the creation of the interests as the value of the property in the property tax year immediately prior to the year in which creation of the fractional interests occurred, increased or decreased by the value directly attributable to the creation of the fractional interests that are exempt property. For subsequent property tax years, the nonexempt fractional interests shall be valued pursuant to the applicable methods of valuation.