Copyright © 2021 Albuquerque Journal
SANTA FE – Outside buyers have long purchased high-priced vacation homes in places such as Santa Fe and Taos. A new bill could make them even more expensive.
House Bill 291 would, in part, remove the 3% cap on property tax increases for second or third homes in New Mexico and replace it with a 10% limit.
Rep. Matthew McQueen, D-Galisteo, has sponsored similar legislation during two previous sessions, but said this is “the first time it’s been done with good organization.”
He said the 3% cap dates back to a law passed in 2000, which sought to prevent New Mexicans from being priced out of their homes due to property tax increases. An unintended consequence of that law, though, was that it applied to those who live primarily in other states, but have property in New Mexico.
HB 291, he said, would close the loophole.
“Those aren’t the same homeowners we need to protect,” McQueen said of second-home owners.
Second homes and vacation properties have become increasingly popular in New Mexico, especially in and around cities such as Santa Fe and Taos, which rely heavily on tourism. Census data shows that more than 40% of homes in Taos County are vacant, with about half of those listed as “seasonal or recreational.”
In Santa Fe, second homes have historically drawn the ire of residents who say the influx of wealthy second homebuyers increases property values across the city, thereby pricing people out of the market.
Joseph Montoya, executive director of the Santa Fe County Housing Authority, said the bill is more focused on tax equity, rather than housing affordability.
“It’s not trying to target people who live here or don’t live here,” Montoya said. “It’s just making sure that it’s targeted for a very specific set of folks.”
Cities and counties have also voiced support for the legislation, as its passage could lead to higher revenues, especially for cities with high numbers of second homes.
In a letter to legislators, Santa Fe Mayor Alan Webber wrote the removal of a cap for second-home owners is necessary because the bill is designed to protect New Mexico families.
“The social policy that applies to our long-standing Santa Fe families certainly doesn’t apply to (second-home owners),” Webber wrote.
McQueen said it would certainly help the finances of some communities if passed.
But many say this new version will still have unintended consequences for some.
John Garcia, executive vice president of the Home Builders Association of Central New Mexico, said it’s common for New Mexican families to purchase second homes for relatives, but would be less likely to do so if taxes spike.
He also said that his organization has worked to attract wealthy senior citizens to retire in New Mexico and that HB 291 would only act as a deterrent.
The House of Representatives passed the bill Wednesday. It now has to make its way through Senate committees before receiving a final vote.