Updated October 8, 2026. Quick answer: Yes. “New Mexico is a community property state”, according to the New Mexico Courts, which cite “Section 40-3-8 NMSA 1978”. The IRS lists nine community property states.
New Mexico community property at a glance
| Item | What the documents say |
|---|---|
| Regime | Community property |
| At divorce | Community property or debt belongs to each party equally (NM Courts divorce instructions) |
| At a spouse’s death | One-half of the community property belongs to the surviving spouse (Section 45-2-805 NMSA 1978, as quoted by the Taxation and Revenue Department) |
| Federal basis at the first death | Both halves of community property can take a new basis at the first death (26 U.S.C. 1014(b)(6)) |
| Source | New Mexico Judicial Branch (nmcourts.gov); New Mexico Taxation and Revenue Department, Hearing Bureau; IRS Publications 551 and 555; 26 U.S.C. 1014 |
What the New Mexico statutes say
The New Mexico Courts’ self-representation divorce page is the state document that states the regime and names the statute, Section 40-3-8 NMSA 1978. The statute’s own text could not be retrieved from the official code site for this page, so the statements here rest on the courts’ pages and a state agency decision, listed under Sources.
At divorce in New Mexico
The Courts’ stage 2 divorce instructions put the rule in plain terms: “Community property or debt belongs to each party equally”.
At a spouse’s death in New Mexico
For a spouse’s death, the New Mexico Taxation and Revenue Department’s hearing decision in Protest of Kay E. Raines (No. 00-18) quotes Section 45-2-805 NMSA 1978: “one-half of the community property belongs to the surviving spouse”, and the other half is subject to the decedent’s testamentary disposition. The decision is from 2000, so check the current section before relying on its wording.
What it does to basis when the first spouse dies
The federal basis rule is why the label matters to a couple. IRS Publication 551 says that when a spouse dies in a community property state, the total value of the community property “generally becomes the basis of the entire property”. The rule applies only if at least half the value of the community property interest “must be includible in the decedent’s gross estate”. The statute behind it, 26 U.S.C. 1014(b)(6), covers “property which represents the surviving spouse’s one-half share of community property”.
Computed illustration, not tax advice: suppose a New Mexico couple paid $100,000 for shares worth $400,000 when one spouse dies, and all of it is community property with at least half included in the decedent’s gross estate. The survivor’s basis in the whole becomes $400,000. A sale at that value shows no gain. Held instead as a qualified joint interest in a common law state, only one half is included in the estate, and the survivor’s basis is the total of two halves: $200,000 for the half that steps up plus $50,000 as the cost of the survivor’s own half, which makes $250,000. A sale at $400,000 would then show a gain of $150,000. CMG’s community property step-up page and common law step-up page go through the same difference.
What the documents do not say
- The text of Section 40-3-8 and of the divorce statute, Section 40-4-7, was not retrieved. Whether the rules reach a couple who moved to New Mexico was not found in the documents read.
Common mistakes
- Treating the 2000 Taxation and Revenue Department decision as the current statute; it quotes the statute as it read then.
- Assuming the answer in this state settles it for a couple who move; the rules depend on the state where the spouses are domiciled and, for property in a trust, on the trust.
Related: community property states by state, how both halves step up in a community property state, New Mexico retirement taxes, and New Mexico probate cost.
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Answer againSources
- Divorce: Self-Representation, New Mexico Courts: https://selfrepresentation.nmcourts.gov/divorce/
- Getting a Divorce: Stage 2 Instructions (Catron), New Mexico Seventh Judicial District Court: https://nmcourts.gov/wp-content/uploads/sites/25/2024/02/Stage-2-Instructions-for-Divorce-Catron.pdf
- Decision and Order, Protest of Kay E. Raines No. 00-18 (quotes Section 45-2-805 NMSA 1978): https://www.tax.newmexico.gov/businesses/wp-content/uploads/sites/9/2020/11/00-18__kay_e_raines.pdf
- IRS Publication 551, Basis of Assets (December 2025): https://www.irs.gov/pub/irs-pdf/p551.pdf
- 26 U.S.C. 1014, Basis of property acquired from a decedent (United States Code, 2024 Edition): https://www.govinfo.gov/link/uscode/26/1014?link-type=html
Sources: the primary documents linked above, read on October 8, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.