(1) PURPOSE. This
section clarifies the terms "gross rent" and "rent constituting property taxes
accrued" as the terms apply to homestead credit claims.
(2) DEFINITIONS.
(a) "Gross rent" has the meaning specified in
s. 71.52(2),
Stats. Gross rent includes payments by a claimant to the landlord for items
normally associated with the occupancy of a homestead, such as a garage or
parking space, appliances, furniture or utilities. However, payments for food,
medical services or other personal services are expressly excluded under s.
71.52(2),
Stats. In situations where charges for food and services are subtracted from
amounts paid to a landlord, gross rent is commonly referred to as "rent paid
for occupancy."
(b) "Rent
constituting property taxes accrued" has the meaning specified in s.
71.52(8),
Stats.
(3) RENT PAYMENTS.
(a) Gross rent may be claimed only for the
year to which the claim relates, but it may have been paid at any time before
the claim is filed.
(b) Property
taxes accrued on a claimant's homestead not owned by the claimant or a member
of the claimant's household, which are paid by the claimant on behalf of an
owner who does not reside in the homestead and who does not claim property
taxes accrued under s.
71.54(2) (c) 2,
Stats., shall be considered gross rent.
(c) Personal property taxes or mobile home
parking permit fees assessed under s.
66.0435(3) (c),
Stats., paid by a claimant for a rented mobile home shall be considered gross
rent. In addition, rental paid to a landlord for a mobile home or for land on
which a mobile home is located shall be considered gross
rent.
(4) VERIFICATION OF
RENT CONSTITUTING PROPERTY TAXES ACCRUED.
(a)
Except as provided in pars. (b) and (c), if a claimant claims rent constituting
property taxes accrued the claimant and the landlord shall complete form I-017,
"Rent Certificate," and the claimant shall submit it with schedule H or H-EZ.
The department is not precluded from requesting additional documentation to
verify rent paid in cases it deems appropriate.
(b) If a claimant pays rent for more than one
homestead during a year, a separate rent certificate shall be completed for
each homestead for which the claimant wishes to claim a homestead credit, and
the claimant shall submit all rent certificates together with a single schedule
H or H-EZ.
(c) A landlord shall
determine the reasonable value of food, medical services and other personal
services such as laundry, transportation, counseling, grooming, recreational
and therapeutic services provided to a claimant in addition to occupancy rights
and subtract those amounts from total rent indicated on the rent certificate,
to determine rent paid for occupancy. The landlord shall also indicate whether
heat was included or not included in the rent by checking the appropriate box
on the rent certificate.
(d) Under
s. 71.55(2),
Stats., a landlord is prohibited from charging a fee for completing the rent
certificate.
(e) If a claimant is
unable to obtain a rent certificate from a landlord, proper rent receipts,
money order receipts, cancelled checks or cancelled share drafts substantiating
amounts paid shall be acceptable evidence of gross rent paid. The claimant
shall also include a rent certificate on which all lines except the signature
line have been filled in, or a statement providing the same information as that
requested on the rent certificate. The statement or rent certificate shall
indicate whether heat was included in the rent, and whether food or services as
described in par. (c) were provided and if so the estimated value of the food
and services provided. The statement or top portion of the rent certificate
should be marked with a comment such as "Landlord Refuses to
Sign."
(f) Proper
verification of rent constituting property taxes accrued for a claimant who
pays property taxes on the homestead on behalf of an owner other than the
claimant shall be a copy of the property tax bill and a statement from the
claimant, indicating that he or she paid the property taxes on behalf of an
owner who did not reside in the homestead.
(5) EFFECT OF RELIEF AND OTHER PUBLIC
ASSISTANCE.
(a) Under s.
71.54(2) (a),
Stats., rent constituting 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, rent constituting 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 rent constituting
property taxes accrued as required by par. (a).
(6) MARITAL PROPERTY AGREEMENTS. Under s.
71.52(8),
Stats., a marital property agreement or unilateral statement under ch. 766,
Stats., has no effect in computing rent constituting property taxes accrued for
a person whose homestead is not the same as the homestead of that person's
spouse.
(7) NON-ARM'S LENGTH
RENTAL. Under s.
71.55(8),
Stats., if a homestead is rented under circumstances deemed by the department
to be not at arm's length, it may determine rent constituting property taxes
accrued as at arm's length. The department may make this determination when the
amount claimed is in excess of fair rental value. However, since under s.
71.52(2),
Stats., "gross rent" is limited to rental actually paid, the department may not
increase the rent constituting property taxes accrued to arm's length rental if
the rent paid was at less than fair rental value.
Example: A claimant files a claim with a rent
certificate showing rent paid for occupancy of $7,200, or $600 per month.
Investigation by the Department of Revenue discloses the rent is too high for
the locality and dwelling involved, and the landlord is financially dependent
on others for support and is related to the claimant. The department determines
that the fair rental value of the claimant's homestead for the year of the
claim was $300 per month, or $3,600 for the year. No utilities, food or
services were furnished by the landlord.
Allowable rent constituting property taxes accrued is $900,
which is 25% of $3,600.
(8)
EXEMPT HOUSING.
(a) Under s.
71.53(2) (e),
Stats., no claim for homestead credit may be allowed if a claimant resided for
the entire calendar year to which the claim relates in housing which was 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., except as provided under s.
71.54(2) (c) 2,
Stats. Under s.
71.54(2) (c) 2,
Stats., if a claimant moves to tax-exempt housing, a claim for homestead credit
may be allowed based upon property taxes accrued on the claimant's former
homestead under certain conditions. Those conditions are explained in s.
Tax 14.04 (3)
(e).
(b) Under ss.
71.53(2) (e)
and 71.54(2) (c) 1,
Stats., if a claimant resided for part of the calendar year to which a claim
for homestead credit relates, in a homestead which was either subject to
taxation under ch. 70, Stats., or exempt from taxation under ch. 70, Stats.,
but for which payments in lieu of taxes were made under s.
66.1201(22),
Stats., the property taxes accrued or rent constituting property taxes accrued
or both for that homestead are allowed for that portion of the year.
(c) Payments in lieu of taxes made under s.
66.1201(22),
Stats., as provided in pars. (a) and (b), are made by most facilities licensed
with the state of Wisconsin as "housing authorities." Rent paid to those
housing authorities may be used to determine gross rent and rent constituting
property taxes accrued. However, other types of exempted housing which make
payments in lieu of taxes do not make the payments under s.
66.1201(22),
Stats., and therefore rent paid to those types of exempted housing may not be
used to determine gross rent and rent constituting property taxes
accrued.
(d) Types of tax-exempt
housing other than housing authorities include:
1. Federal low-income housing under the
housing and urban development, or "H.U.D." program.
2. Student dormitories owned by nonprofit
educational institutions.
3.
Housing units of religious organizations.
4. Charitable, nonprofit nursing
homes.
(9)
JOINT OCCUPANTS OF RENTAL UNITS.
(a) Persons
sharing living expenses for a rented homestead who are otherwise eligible for
the homestead credit and who are not members of the same household, shall each
be entitled to claim a portion of the rent paid for occupancy of the homestead.
However, the total claims of the joint occupants for rent paid for occupancy
may not exceed 100% of the rent paid to the landlord for occupancy, as shown on
the rent certificate. The amount of rent paid for occupancy shall be the ratio
which the contribution of the claimant or claimant's household to the cost of
shared living expenses, such as rent, food, utilities and supplies, bears to
the total cost of the shared living expenses.
Example: X, Y, and Z are 3 unrelated joint occupants of a
rental unit who share expenses as follows:
|
Living Expenses
|
X
|
Y
|
Z
|
Total
|
|
Rent for occupancy
|
$5,400
|
$ -
|
$ -
|
$5,400
|
|
Food
|
-
|
1,350
|
1,350
|
2,700
|
|
Utilities
|
-
|
900
|
-
|
900
|
|
Total living expenses
|
$5,400
|
$2,250
|
$1,350
|
$9,000
|
|
% of total
|
60%
|
25%
|
15%
|
100%
|
Since X paid 60% of the shared living expenses, X's share of
rent paid for occupancy is 60% of $5,400, or $3,240. Likewise, rent paid for
occupancy for Y is 25% of $5,400, or $1,350, and for Z it is 15% of $5,400, or
$810. Total rent paid for occupancy for all 3 claimants is $5,400, as shown on
the rent for occupancy line.
(b) If a claimant described in par. (a) is
entitled to more or less rent paid for occupancy than is shown on the rent
certificate completed by the landlord for the claimant, the claimant shall in
addition to the certificate attach a statement to the homestead credit claim
showing the computation of claimed rent paid for occupancy and identifying the
other occupants of the homestead with whom rent and living expenses were shared
during the year to which the claim relates by giving the name, current address
at the time of filing the claim, if known, and social security number, if
known.
(10) RENT PAID FOR
LAND. Under s.
71.52(2),
Stats., the portion of s.
71.52(7),
Stats., pertaining to property taxes accrued on land as described in s.
Tax 14.04
(10) also applies to gross rent paid for
land.
(11) MULTIPURPOSE AND
MULTIDWELLING BUILDINGS. Under s.
71.52(2),
Stats., the portion of s.
71.52(7),
Stats., pertaining to property taxes accrued on multipurpose and multidwelling
buildings as described in s.
Tax 14.04
(11) also applies to gross rent paid for a
multipurpose or multidwelling building of which the homestead is a
part.
(12) SHARECROPPERS. "Rent
constituting property taxes accrued" of a person sharing the costs or proceeds
or both from the operations of a farm with the owner of the farm property in
consideration for use of the homestead, land, machinery or equipment equals 25%
of the owner's share of the net proceeds applicable to occupancy of the
homestead, or 20% if heat is included in the cost of the rent.
Example: A sharecropper resides on and operates a
120 acre dairy farm. The landlord and the sharecropper share equally the gross
receipts from crop sales, $10,000, the gross milk receipts, $40,000, and the
cost of seed and feed, $20,000. The landlord furnishes the land, buildings and
machinery, for which annual allowable depreciation is $6,000. The landlord pays
for the heat. In this situation, rent constituting property taxes accrued for
the sharecropper equals 20% of the owner's share of the proceeds less the value
of the nonoccupancy items furnished by the landlord, as follows:
|
Landlord's share of crop receipts
|
$ 5,000
|
|
Landlord's share of milk receipts
|
20,000
|
$ 25,000
|
|
Less nonoccupancy items furnished by landlord:
|
|
Landlord's share of seed and feed
|
$ 10,000
|
|
Depreciation of buildings (not including the
dwelling) and machinery
|
6,000
|
16,000
|
|
Gross rent
|
$ 9,000
x20%
|
|
Rent constituting property taxes accrued
|
$ 1,800
|
(13)
LOW-INCOME HOUSING.
(a) Indirect payments of
rent, such as a subsidy payment from a governmental agency for low-income
housing, are not includable in determining gross rent.
(b) A landlord may receive both payments from
a claimant and subsidy payments from a governmental agency for rental of the
claimant's homestead. If the allocation of the subsidy payments to food,
medical services or other personal services as described in s.
71.52(2),
Stats., furnished by the landlord is not specified under the terms of an
agreement with the governmental agency, the portion of the rent paid for
occupancy eligible for the homestead credit shall be the total rent paid for
occupancy multiplied by a fraction, the numerator of which is the amount paid
by the claimant and the denominator of which is the total amount paid including
governmental subsidies.
Example: A total of $5,400 is paid to a claimant's
landlord for the year on behalf of the claimant, $1,800 by the claimant and
$3,600 by a governmental agency. The value of food provided in $600 and no
services are provided.
Qualifying rent paid for occupancy is $1,600, computed as
follows: $4,800×[$1,800÷$5,400]. The $4,800 is the total amount
paid, $5,400, less the $600 for food. The $1,800 is the amount the claimant
paid and the $5,400 is the total amount paid.
(c) If an agreement with the agency paying
the subsidy specifies how the subsidy is to be applied, the agreement shall be
controlling in the determination of the claimant's rent paid for
occupancy.
(14) NURSING
HOMES AND LONG-TERM CARE FACILITIES.
(a) Any
one of the following methods may be used by residents of nursing homes or
long-term care facilities to determine rent paid for occupancy:
1. A standard rate of $100 per week but not
more than the actual rent paid.
2.
The percentage of building occupancy expenses method. Under this method, the
ratio that a nursing home's or a long-term care facility's building occupancy
expenses for a year bears to gross income received in that year, both directly
from residents and indirectly from governmental aid, is determined. This ratio
is applied to a resident's total direct payments for a year for which a
homestead credit claim is filed, yielding the portion of the payments
constituting rent paid for occupancy. This ratio shall be determined from the
most recent income and expense data available at the time a rent certificate is
prepared, preferably using data from the same year for which the homestead
credit is claimed. The building occupancy expenses claimed shall be limited to
the expenses attributable to real estate and furnishings only, such as property
taxes, interest, lease or rent expenses, depreciation, upkeep and repairs and
utilities.
Example: Example: The following formula may be
used to compute a resident's rent paid for occupancy; the worksheet is filled
in as an example of how to compute the percentage:
1. Building occupancy expenses -real estate
and furnishings only
|
a. Property taxes
|
$ 30,000
|
|
b. Interest
|
70,000
|
|
c. Lease or rent expenses
|
10,000
|
|
d. Depreciation
|
60,000
|
|
e. Upkeep and repairs
|
10,000
|
|
f. Utilities
|
20,000
|
|
g. Total building occupancy expenses
|
$ 200,000
|
|
2. Gross income, including indirect
payments
|
$1,600,000
|
|
3. Line 1.g divided by line 2 equals the percentage
rate
|
12.5%
|
The percentage rate determined above is to be multiplied by
the total rent collected as entered on the rent certificate prepared for a
resident filing a homestead credit claim, and the amount so determined is to be
entered on the rent certificate as rent paid for occupancy. Assuming a
resident's total direct payments for the year were $36,000, rent paid for
occupancy would be $4,500, which is 12.5% of $36,000
3. Any other appropriate method, subject to
prior approval by the department.
(b)
1.
Under s. 71.53(2) (f),
Stats., a resident living in a nursing home and receiving medical assistance
under s. 49.45, Stats., at the time of
filing a homestead credit claim is not eligible for the homestead
credit.
2. A person living in a
nursing home who received medical assistance under s.
49.45, Stats., during the year
to which the claim relates but is not receiving the medical assistance at the
time of filing a homestead credit claim may claim the homestead credit if
otherwise eligible. In this situation, amounts paid by medical assistance are
not includable in determining rent paid for occupancy.
(c) If a fixed charge is made upon admission
to a nursing home or long-term care facility entitling a person to occupancy
for the balance of the person's life and additional monthly charges are solely
for current maintenance and services, only the initial charge for occupancy
shall be "gross rent." The terms of the agreement between the occupant and the
nursing home or long-term care facility shall establish the year or years in
which the rent paid for occupancy shall be deemed to be paid. If the rent paid
is refundable in part should the occupant leave the home or if the rental
payment is held in a trust by the home for the occupant, the initial payment
will not be deemed to be paid entirely in one year but shall be prorated.
Notes
Wis. Admin. Code
Department of Revenue
Tax 14.05
Cr. Register, February,
1990, No. 410, eff. 3-1-90; am. (3) (c) and (8) (a), renum. (8) (b) and (c) to
be (8) (c) and (d) and am. (c), cr. (8) (b), Register, January, 1991, No. 421,
eff. 2-1-91; r. and recr. (2) and (5), r. (3) (b) and (13) (a) 1. to 3., renum.
(3) (c) and (d) to be (3) (b) and (c), (13) (a) (intro.) and (b) to be (13) (b)
and (c), (14) (b) to be (14) (b) 1., am. (3) (b), (4) (a) to (c), (e), (7), (8)
(a) to (d) (intro.), 1., to 3., (9) (a), (12), (13) (a), (b), (14) (a) 1. and
2., cr. (13) (a) and (14) (b) 2., Register, July, 2000, No. 535, eff. 8-1-00;
corrections in (3) (c), (8) (a), (b) and (c) made under s.
13.93(2m) (b)
7, Stats., Register September 2006 No. 609.
Amended by, CR
16-046: am. (4) (a), (b)
Register
January 2018 No. 745, eff.
2/1/2018
Amended
by, CR 21-085: r. (8) (b) (Example)
Register
August 2022 No. 800, eff.
9/1/2022
The computation of rent constituting 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 14.05 interprets ss.
71.52(2) and
(8),
71.53(2) (e) and
(f),
71.54(2) (a) and
(c) and
71.55(2) and
(8), 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 rent constituting 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 rent constituting 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.
The standard rate of $100 per week for rent paid for
occupancy by residents of nursing homes or long-term care facilities became
effective with rent paid for calendar year 2000. For rent paid for calendar
years 1999 and prior, the standard rate was $40 per
week.
