(1) PURPOSE. This section clarifies the
meaning of "property taxes accrued" as the term applies to homestead credit
claims.
(2) DEFINITION. Under s.
71.52(7),
Stats., "property taxes accrued" means real or personal property taxes or
monthly parking permit fees under s.
66.0435(3) (c),
Stats., exclusive of special assessments, delinquent interest and charges for
service, levied under ch. 70, Stats., on a homestead owned by a claimant or a
member of the claimant's household, less the tax credit, if any, afforded in
respect of the property by s.
79.10, Stats. With respect to
sub. (3) (e), "property taxes accrued" means the property taxes accrued levied
on the former homestead owned by the claimant.
(3) QUALIFYING PROPERTY TAXES.
(a) Property taxes shall be levied on a
homestead or former homestead to qualify as "property taxes accrued."Property
taxes are levied when the tax roll is delivered to the local treasurer for
collection, usually on or near December 15 of each year.
(b) The property taxes accrued on a homestead
or former homestead for the year to which a claim relates need not be paid
prior to filing a homestead credit claim. The fact that the property taxes
accrued on the homestead or former homestead are delinquent for years prior to
the year to which a claim relates does not disqualify the claimant.
(c) "Property taxes accrued" includes
personal property taxes assessed on a homestead or former homestead that is
constructed on leased land or assessed on a mobile home owned by the claimant
or a member of the claimant's household. "Property taxes accrued" also includes
mobile home parking permit fees assessed under s.
66.0435(3) (c),
Stats., for a mobile home owned by the claimant or a member of the claimant's
household.
(d) Under s.
71.52(3),
Stats., a buyer of a homestead or former homestead in possession under a land
contract shall be entitled to claim the property taxes accrued on the homestead
or former homestead.
(e) Under s.
71.54(2) (c) 2,
Stats., if a claimant has moved from a homestead owned by the claimant to
housing that is exempt from taxation under ch. 70, Stats., other than housing
for which payments in lieu of taxes are made under s.
66.1201(22),
Stats., and other than a correctional or detention facility, a claim or claims
may be allowed based on the property taxes accrued on that former homestead,
provided the claimant has attempted to sell the former homestead. The property
taxes accrued on the former homestead may be claimed for the period of time
ending on the earliest date any of the events in subds. 1. to 4. occurs. If the
earliest date any of those events occurs is in the calendar year following the
year in which the claimant moves to the tax-exempt housing, the property taxes
accrued shall be prorated from the date of the move to December 31 on a claim
for the calendar year in which the move occurs, and from January 1 to the
earliest date any of the events in subds. 1. to 4. occurs on a claim for the
succeeding calendar year. The events after which the property taxes accrued on
the former homestead may no longer be claimed are as follows:
1. The claimant ceases to own the former
homestead.
2. The claimant begins
to rent out or lease out the former homestead.
3. The claimant ceases to reside in the
tax-exempt housing.
4. Twelve
months of time elapses from the date of moving to the tax-exempt housing.
Example: A claimant moves on July 1, 2017, from
the homestead she owns to an apartment that is exempt from property taxes. She
has listed her former homestead for sale with a realtor. While continuing to
reside in the apartment, she sells the former homestead; the date on the
closing agreement is May 31, 2018. The property taxes accrued on the former
homestead are $2,400 for 2017 and the prorated property taxes on the closing
agreement are $1,000. The claimant may file a 2017 homestead credit claim,
based on the 2017 property taxes accrued of $2,400 for the entire year. She may
also file a 2018 claim, based on the property taxes accrued of $1,000, prorated
from January 1, 2018, to the date of the sale.
(4) VERIFICATION OF PROPERTY TAXES
ACCRUED.
(a) Except as provided in pars. (b)
and (c), a claimant who claims property taxes accrued shall submit with the
homestead credit claim a copy of the property tax bill, or if not available, a
substitute for the property tax bill containing equivalent information to that
appearing on the original property tax bill.
(b) If a claimant sells a homestead during
the year to which a claim for homestead credit relates, proper verification of
property taxes accrued shall be a copy of one of the following documents:
1. The closing agreement from the sale of the
homestead.
2. The property tax bill
for the year prior to the year to which the claim relates.
3. The property tax bill for the year to
which the claim relates.
(c) If a claimant's homestead is a mobile
home owned by the claimant or a member of the claimant's household, on which
parking permit fees are assessed under s.
66.0435(3) (c),
Stats., proper verification of property taxes accrued shall be a copy of the
parking permit fee statement issued by an authorized representative of the
municipality in which the mobile home was located, or if the claimant paid rent
for the land on which the mobile home was located and also paid parking permit
fees to a landlord, a statement of the parking permit fees paid to the
landlord, signed by the landlord, such as a form I-017, "Rent
Certificate."
(5) EFFECT
OF RELIEF AND OTHER PUBLIC ASSISTANCE.
(a)
Under s. 71.54(2) (a),
Stats., property taxes accrued shall be reduced by one-twelfth for each month
or portion of a month for which the claimant received either $400 or more of
county relief under s.
59.53(21),
Stats., or any amount of aid to families with dependent children, or "AFDC"
under s. 49.19, Stats., Wisconsin works
payments for community service jobs or transitional placements under s.
49.147(4) or
(5), Stats., or Wisconsin works payments as a
caretaker of a newborn child under s.
49.148(1m),
Stats. However, property taxes accrued need not be reduced if the assistance
consists solely of foster care payments under s.
49.19(10) (a),
Stats., non-legally responsible relative, or "NLRR" AFDC payments or kinship
care payments.
(b) County relief
and other cash public assistance payments that are repaid by the claimant in
the same calendar year in which they are received are not considered payments
for purposes of computing the one-twelfth reduction of property taxes accrued
as required by par. (a).
(6) MARITAL PROPERTY AGREEMENTS. Under s.
71.52(7),
Stats., a marital property agreement or unilateral statement under ch. 766,
Stats., has no effect in computing property taxes accrued for a person whose
homestead is not the same as the homestead of that person's spouse.
(7) OWNERSHIP OF HOMESTEAD BY ONE PERSON OR
ONE HOUSEHOLD. An otherwise qualified person who owns and resides in a
Wisconsin homestead may claim a homestead credit based upon property taxes
accrued on the homestead, even if another person pays the property
taxes.
(8) OWNERSHIP OF HOMESTEAD
BY MORE THAN ONE PERSON.
(a) Except as
provided in par. (c), under s.
71.52(7),
Stats., if a homestead is owned by 2 or more persons or entities as joint
tenants or tenants in common or is owned as marital property or survivorship
marital property and one or more of the co-owners is not a member of the
claimant's household, property taxes accrued is that part of the property taxes
accrued levied on the homestead, reduced by the tax credit under s.
79.10, Stats., that reflects the
ownership percentage of the claimant and the claimant's household.
(b) Except as provided in par. (c), if a
qualified claimant residing in a co-owned homestead pays the property taxes
accrued for a co-owner not residing in the homestead and not claiming property
taxes accrued under s.
71.54(2) (c) 2,
Stats., and sub. (3) (e), the claimant may claim a homestead credit based upon
both the claimant's proportionate share of "property taxes accrued" as
described in par. (a) and "gross rent" for the property taxes accrued paid on
behalf of each absent owner, as provided in s.
Tax 14.05 (3)
(c). On the other hand, if a qualified
claimant residing in a co-owned homestead pays the property taxes accrued for a
co-owner who also resides in the homestead but is not a member of the payor's
household, or who is claiming property taxes accrued under s.
71.54(2) (c) 2,
Stats., and sub. (3) (e), each co-owner may file a claim based upon that
portion of the property taxes accrued that reflects the ownership percentage of
each claimant and his or her household.
Examples:
1) A, B and C each own a one-third interest
in a dwelling. A and B are married to each other and live in the dwelling; C
lives elsewhere. A and B both qualify for homestead credit and pay all of the
property taxes accrued, which are $1,800. Either A or B may claim a homestead
credit based upon "property taxes accrued" of $1,200, their two-thirds share,
plus "gross rent" of $600, since they pay C's one-third share of the property
taxes. If C had also occupied the homestead, A and B could have claimed only
$1,200 of "property taxes accrued" and no "gross rent," even though they paid
the entire $1,800. In addition, C could have filed a claim if otherwise
qualified, based upon "property taxes accrued" of $600.
2) A mother and son each own a one-half
interest in a dwelling occupied solely by the mother, who qualifies for
homestead credit. The son pays all of the property taxes accrued on the
dwelling. The mother may claim a homestead credit based upon one-half of the
property taxes accrued.
3) A
brother and sister both qualify for homestead credit and own 75% and 25%
interests, respectively, in a homestead they both occupy. The brother pays all
of the property taxes accrued on the homestead. Each may claim a homestead
credit based upon the portion of property taxes accrued reflecting their
ownership percentage.
(c)
Under s. 71.52(7),
Stats., if a claimant has inherited a partial ownership interest in a
homestead, is entitled to possession of the property and is required by the
terms of the will that transferred the ownership to pay all of the property
taxes on the homestead, the claimant may claim a homestead credit based upon
the entire amount of property taxes accrued on the
homestead.
(9) SALE OR
PURCHASE OF HOMESTEAD.
(a) Under s.
71.52(7),
Stats., if a claimant sells or purchases a homestead during the year to which a
claim for homestead credit relates, the property taxes accrued shall be
prorated for the time the seller or buyer both owned and occupied the homestead
during the year. The seller may use the closing agreement, the property tax
bill for the year prior to the year to which the claim relates or the property
tax bill for the year to which the claim relates as the basis for computing
allowable property taxes accrued. The purchaser may use only the property tax
bill for the year to which the claim relates as the basis for computing
allowable property taxes accrued.
(b) Except as provided under s.
71.54(2) (c) 2,
Stats., and sub. (3) (e), if a seller moved from the homestead or established a
homestead elsewhere before the closing date shown on a closing agreement and
the property taxes are prorated on the agreement to the closing date, the
property taxes shall be further prorated for homestead credit purposes to
consider in the year of sale only the property taxes for the period the seller
maintained a homestead on the property.
Example: Ownership of a homestead is transferred
on June 30. The prorated property taxes for 6 months on the closing agreement
are $1,200. The seller moves from that homestead to a new homestead on May
31.
The portion of prorated property taxes allowable to the seller
is $1,000, which is the property taxes from January 1 to May 31, rather than
the $1,200 shown on the closing agreement.
(10) PROPERTY TAXES ACCRUED ON LAND.
(a)
Not part of a farm.
Under s. 71.52(3) and
(7), Stats., if a homestead is not part of a
farm, property taxes accrued for land are limited to the property taxes on up
to one acre of land which surrounds the homestead dwelling and is reasonably
necessary to the use of the dwelling as a home. A parcel of land separated from
the homestead parcel by such things as a street, river or utility right-of-way
shall be considered to be a part of the homestead parcel.
(b)
Part of a farm. Under s.
71.52(7),
Stats., if a homestead is part of a farm, property taxes accrued on up to 120
acres of land which surrounds the homestead dwelling may be claimed. Property
taxes accrued for parcels of land which do not surround the homestead parcel
shall be allowed if the nonsurrounding parcels are necessary to the use of the
homestead parcel as a home.
Example: A farmer owns 3 parcels of land, 60, 40,
and 20 acres in size. The homestead is located on the 60 acre parcel. The 60
and 20 acre parcels have a common border. The 40 acre parcel is separated from
the others by a neighboring farm. In this situation, qualifying land includes
both the 60 acre homestead parcel and the 20 acre parcel adjacent to the
homestead parcel. The 40 acre parcel does not qualify since it is not adjacent
to the homestead parcel and is not necessary to the use of the homestead as a
home. However, if the 3 parcels and the neighboring farm were so situated that
a driveway must cross the 40 acre parcel, as well as a portion of the
neighboring farm, to reach the homestead or if a substantial portion of farm
buildings necessary to the operation of the farm were on the 40 acre parcel,
then that parcel would qualify since it would be necessary to the use of the
homestead as a farm home. If the 3 parcels were situated so that the 60 acre
parcel bordered on the 20 acre parcel which in turn bordered on the 40 acre
parcel, the taxes on all 3 parcels would qualify, since they form one
contiguous unit.
(11) MULTIPURPOSE AND MULTIDWELLING
BUILDINGS. Under s.
71.52(7),
Stats., property taxes accrued on a homestead that is part of a multipurpose or
multidwelling building are the property taxes accrued on the portion occupied
as a principal residence, based upon a percentage of the total property taxes
accrued on the multipurpose or multidwelling building and the same percentage
of the property taxes accrued on the land surrounding it which otherwise
qualifies as described in sub. (10). Property used partly as a homestead and
partly for any business purpose, other than farming, for which a deduction is
allowed or allowable for income tax purposes is multipurpose property. Property
used partly as a homestead and partly as living quarters rented to others is
multidwelling property. A building divided into 2 units, one of which is the
homestead of a claimant and the other of which is the living quarters of a
person who does not pay rent is multidwelling property, even though there is no
business or rental use.
Examples:
1) A claimant was a homeowner who as a
salesperson used one room of the 8-room house exclusively for business
activities. Property taxes accrued for the year were $1,600. The claimant may
claim only seven-eighths of the property taxes accrued, or $1,400, in the
computation of allowable homestead credit, since the other one-eighth, or $200,
constitutes business taxes.
2)
Assume the same facts as in example 1, except that the room was not used
exclusively for business. No deductions would be allowable for income tax
purposes and the full $1,600 of property taxes accrued could therefore be
claimed in the computation of allowable homestead credit.
3) A claimant owned a duplex, lived in one
of the 2 equal-sized units and rented out the other unit. Property taxes
accrued for the year were $2,400. Only $1,200, representing the property taxes
accrued on the claimant's principal dwelling, may be claimed in the computation
of allowable homestead credit.
4)
Assume the same facts as in example 3, except that the claimant lived in one
unit and the claimant's son or daughter lived in the other unit but was not
required to pay rent. The claimant nevertheless may claim only $1,200 of the
property taxes accrued.
(12) PROPERTY SUBJECT TO A LIFE ESTATE.
Property taxes assessed on property subject to a life estate may only be
claimed as "property taxes accrued" for purposes of homestead credit by a
person in possession of the life estate interest. The life estate must be in
writing and incorporated in the warranty deed or other legal documentation.
Example: A widow and her son reside in the same
homestead. Prior to the year of the claim, the widow transferred the property
to her son by quit-claim deed but retained a life estate in the property. She
pays the property taxes, but the property tax bill comes in her son's name. If
otherwise qualified, the widow may file a claim for homestead credit based upon
the entire amount of property taxes accrued. The son may not claim homestead
credit based upon any portion of the property taxes accrued on the homestead
even though he resides in the property and is otherwise
qualified.
Notes
Wis. Admin. Code
Department of Revenue
Tax 14.04
Cr. Register, February,
1990, No. 410, eff. 3-1-90; am. (2), (3) (a) to (d), (8) (b) and (9) (b), cr.
(3) (e), Register, January, 1991, No. 421, eff. 2-1-91; am. (2), (3) (b), (c),
(4) (a), (b) 1., 2. and (c), (8) (a), (b), (9) (a), (b), (10) (a) and (11), r.
and recr. (5) and cr. (8) (c), Register, July, 2000, No. 535, eff. 8-1-00;
corrections in (2), (3) (c), (e) and (4) (c) made under s.
13.93(2m) (b)
7, Stats., Register September 2006 No. 609.
Amended
by, CR 21-085: am. (3) (e) (Example)
Register
August 2022 No. 800, eff.
9/1/2022
The computation of property taxes accrued of a claimant who
becomes married or divorced during a claim year or occupies a separate dwelling
from his or her spouse for any part of a claim year is described in s.
Tax
14.06.
Section Tax 14.04 interprets ss.
71.52(3) and
(7) and
71.54(2) (a) and (c)
2., Stats.
Section
71.54(2) (a)
(intro.), Stats., was amended by 1995 Wis. Act 27, effective July 28, 1995, to
reference "relief from any county under s.
59.07(154),"
Stats. (s. 59.07(154),
Stats., was renumbered s.
59.53(21),
Stats., by 1995 Wis. Act 201, effective September 1, 1996). Section
71.54(2) (a)
(intro.), Stats., was again amended, by 1995 Wis. Act 289, effective July 1,
1996, to provide for a one-twelfth reduction of property taxes accrued for
months a claimant received Wisconsin works under s.
49.147(4) or
(5), Stats. Prior to the enactment of 1995
Wis. Acts 27 and 289, the county relief reference was to "general relief from
any municipality or county," and there was no reference to Wisconsin works
because that program did not exist.
Section
71.54(2) (a)
(intro.), Stats., was amended by 1999 Wis. Act 9, effective for 2000 homestead
credit claims filed in calendar year 2001 and thereafter, to require a
one-twelfth reduction of property taxes accrued for months a claimant received
Wisconsin works payments as a caretaker of a newborn child under s.
49.148(1m),
Stats. Under the statutes in effect immediately prior to the enactment of 1999
Wis. Act 9, the reduction was not required for receipt of those
payments.
