NMSA 1978, § 7-36-4 — 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 [Chapter 3, Article 45
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 through 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;
provided, however, that improvements, including leasehold interest in the
improvements, are exempt if the improvements are:
(a) electric transmission and interconnected storage facilities and all related
structures, properties and supporting infrastructure that have been acquired by the New
Mexico renewable energy transmission authority and qualify as an eligible facility
pursuant to the New Mexico Renewable Energy Transmission Authority Act [Chapter
62, Article 16A NMSA 1978]; and
(b) leased by the New Mexico renewable energy transmission authority to a
nonexempt entity to construct, operate or assist the authority in constructing or
operating the eligible facility; 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.