Addressing New Mexico’s Affordable Housing Crisis: MFA’s State Tax Credit Program Offers Hope and Incentives

A study commissioned in 2022 by the New Mexico Mortgage Finance Authority (MFA) has highlighted critical issues affecting New Mexico’s housing marketing. The study revealed a concerning shortage of 32,000 affordable units for low-income households in New Mexico. The lack of affordable housing not only hinders household self-sufficiency and economic growth but also impedes state and local economic development.

Insufficient affordable housing poses challenges for attracting new businesses to urban areas and places additional burdens on the growth of existing businesses.

To address these issues while fostering mutual benefits for state residents and businesses, MFA offers the State Tax Credit program. This program encourages individuals and businesses to donate to the construction of affordable housing in New Mexico.

Why Donate?

Individuals or businesses who donate to the State Tax Credit program will receive tax credits up to 50% of the donation value, which they can apply toward state income tax, gross receipts tax, and compensating tax burdens.  These tax credits can be redeemed entirely or fractionally in the first year of the donation or carried forward for up to 5 years.

The donations serve as incentives for the development of affordable housing in New Mexico and are awarded to developers by MFA through an application process. Recipients of the tax credits can use the funds for various purposes, such as land and building acquisition, construction, rehabilitation, conversion, and weatherization of affordable housing. Since the inception of the program, MFA has awarded tax credit donations to 63 projects, resulting in an increase of over 745 affordable units in New Mexico.

Success Stories

Among the 63 awarded projects is the heartwarming story of Pete and Marylou Felix, who live in an older home and have struggled to stay warm for the past few years. Pete suspected that the heater was failing and installed a wood stove. Sadly, after a recent heart attack, he was unable to chop wood for the upcoming winter. In 2018, Pete and Marylou received the exciting news that their home was approved for weatherization through MFA’s NM Energy$mart program. Contributions to the New Mexico Affordable Housing Charitable Trust enabled MFA to weatherize their home, providing them with a new energy-efficient heater, water heater, CO2 detectors, smoke alarms, mechanical ventilation, and highly rated insulation. With the improvements to their home, they can expect to save approximately $850 a year on utility bills.

Another gratifying story provided by Greater Albuquerque Habitat for Humanity, a long-term partner of MFA, features Elvira, a mother of four who always dreamed of owning a home. She heard about Habitat for Humanity through a relative and was approved for a home funded through the State Tax Credit program. As she describes, having a home makes her feel accomplished, fulfilling her lifelong dream.  Knowing that she won’t have to move is such a relief to her and her family.

MFA has assisted multifamily properties, construction of single-family homes, as well as single-family homeowners through the State Tax Credit program. Since 2006, there has been over $14.6 million awarded towards affordable housing. MFA remains dedicated to collecting more donations, to ensure every New Mexican has access to quality and affordable housing opportunities.           

How to Donate?

Donations may be made directly to an affordable housing development approved by MFA or to the New Mexico Affordable Housing Charitable Trust, which is administered by MFA. The New Mexico Affordable Housing Charitable Trust solely accepts monetary donations, with a minimum amount of $200 and a maximum of $2 million. Approved developers include Greater Albuquerque Habitat for Humanity, Santa Fe Habitat for Humanity, NM Inter-Faith Housing, and HopeWorks.

After donating, MFA or the developer will contact the donor and provide a voucher for the applicable tax credits. Proof of donation and the voucher are then processed by MFA and sent back to the donor.                                          

If you would like to donate, please visit: https://housingnm.org/developers/state-tax-credits/donors-contribute-and-receive