The average value (see rules below) of the real and tangible personal property owned or rented and used in New Mexico for the production of business or farm income during the tax period,

divided by:

The average value (see rules below) of all real and tangible personal property owned or rented and used everywhere for the production of business or farm income during the tax period.

NOTE: A resident using his or her home in any way in a business or farm operation has a property factor in New Mexico.

To determine the average value of real and tangible personal property, use the following rules:

• Property the taxpayer owned during the tax period shall be valued at its original cost. Original cost is the basis of the property for federal income tax purposes (prior to federal adjustments) at the time of acquisition by the taxpayer and adjusted by subsequent capital additions, improvements or partial dispositions;
• Property the taxpayer rented from others and used for business or farm purposes shall be valued at eight times the net annual rental rate. The net annual rental rate is the annual rent paid by the taxpayer less any annual rent received by the taxpayer from subrentals of the same property;
• Determine the average value of property by adding the total value of property held by the taxpayer at the beginning of the tax period to the total value of property held at the end of the tax period. Divide by two,
• A taxpayer may compute an average value on a monthly basis. If the Department determines that a monthly average is necessary to correctly reflect the average value of the taxpayers property, the Department may require the taxpayer to compute an average value on a monthly basis.

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