Wis. Admin. Code Department of Revenue Tax 14.04

Current through October 28, 2024

Section Tax 14.04 - Property taxes accrued

(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.

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.