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Capital Gains Tax in New Mexico
By Priya Raman
A rate that tracks closely with its northern neighbor, Montana.
A rate that tracks closely with its northern neighbor, Montana.
New Mexico taxes capital gains as ordinary income, topping out at 5.90% at the state level. Add the federal 20% rate and the 3.8% NIIT and an investment property sale can reach a combined 29.7%.
The 29.7% breaks into three pieces: 20% federal long-term capital gains, 3.8% NIIT for higher earners, and 5.90% New Mexico state tax. They stack; none of them substitutes for another.
Purely as illustration, take a $250,000 gain with no specific property attached. At New Mexico's combined 29.7% rate, that comes to roughly $74,250. For a real transaction, with depreciation recapture worked in, use the capital gains tax calculator instead of estimating by hand.
A 1031 exchange defers that $74,250 by reinvesting the sale proceeds into another qualifying property rather than pocketing the cash. Model the exchange in the 1031 exchange calculator and track your deadlines with the timeline calculator.