Tax 14.05(12)
(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.
Tax 14.05 Note
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:
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Tax 14.05(13)(a)(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.
Tax 14.05(13)(b)
(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.
Tax 14.05 Note
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.
Tax 14.05 Note
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.
Tax 14.05(13)(c)
(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.
Tax 14.05(14)(a)
(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:
Tax 14.05(14)(a)1.
1. A standard rate of $100 per week but not more than the actual rent paid.
Tax 14.05(14)(a)2.
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.
Tax 14.05 Note
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:
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See PDF for table Tax 14.05 Note
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.
Tax 14.05(14)(a)3.
3. Any other appropriate method, subject to prior approval by the department.
Tax 14.05(14)(b)1.1. 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.
Tax 14.05(14)(b)2.
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.
Tax 14.05(14)(c)
(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.
Tax 14.05 Note
Note: 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.
Tax 14.05 Note
Note: 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.
Tax 14.05 Note
Note: 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.
Tax 14.05 Note
Note: 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.
Tax 14.05 History
History: 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;
CR 16-046: am. (4) (a), (b)
Register January 2018 No. 745, eff. 2-1-18;
CR 21-085: r. (8) (b) (Example)
Register August 2022 No. 800, eff. 9-1-22.
Tax 14.06
Tax 14.06
Marriage, separation or divorce during a claim year. Tax 14.06(1)(1)
Purpose. This section describes the qualifications for a homestead credit and the computation of household income, property taxes accrued and rent constituting property taxes accrued of a claimant who becomes married or divorced during the year to which a homestead credit claim relates or whose spouse occupies a separate dwelling for any part of a claim year.
Tax 14.06(2)(a)
(a) A new household is established when a marriage occurs during a claim year and the spouses reside together after the marriage. Under s.
71.53 (1) (c), Stats., either the husband or the wife may claim a homestead credit for the year of the marriage but not both.
Tax 14.06(2)(b)
(b) Under s.
71.52 (5), Stats., when a marriage occurs during a claim year and the spouses reside together after the marriage, household income shall include the claimant's income for the portion of the calendar year prior to the marriage and the total income of the household for the remainder of the year after the marriage.
Tax 14.06(2)(c)
(c) Under s.
71.52 (7) and
(8), Stats., the spouse filing a claim may claim property taxes accrued or rent constituting property taxes accrued for the homestead of the claimant for the portion of the year prior to a marriage plus the total of those amounts for the common homestead after the marriage.
Tax 14.06 Note
Example: X marries Y on September 1, and they decide that X is to be the claimant. Prior to the marriage, X pays gross rent of $250 per month and Y pays gross rent of $350 per month. They pay gross rent of $500 per month for their jointly occupied apartment after the marriage. Heat is not included at any of the dwellings. X's income is $4,000 prior to the marriage, and X's services and property generate marital property income of $2,000 after the marriage. Y's income is $10,000 prior to the marriage, and Y's services and property generate marital property income of $5,000 after the marriage. There are no dependents.
Tax 14.06 Note
In this situation, household income reportable by X is $11,000, consisting of X's $4,000 of income prior to the marriage plus the $7,000 income of both X and Y after the marriage. Rent constituting property taxes accrued which may be claimed by X is $1,000, which is 25% of the sum of X's rent of $250 per month for 8 months, or $2,000, and 4 months rent at $500 per month after the marriage, or $2,000, totaling $4,000 for the year. Since Y is not the claimant, Y's rent of $350 per month and income of $10,000 for the 8 months prior to the marriage are not considered in computing the homestead credit.
Tax 14.06(3)(a)
(a) If a husband and wife occupy separate homesteads for all or part of a claim year and continue to occupy separate homesteads on December 31 of that year, or if a husband and wife become divorced during a claim year and do not remarry each other by December 31 of that year, each may claim a homestead credit for that year if otherwise qualified, since 2 households exist at the end of the year. When one spouse has permanently moved into a nursing home and the other spouse remains at home, the husband and wife are considered to occupy separate dwellings at the end of the year.
Tax 14.06(3)(b)
(b) If a husband and wife occupy separate homesteads for part of a claim year but occupy the same homestead on December 31 of that year, only one of the spouses may claim a homestead credit for that year, since only one household exists at the end of the year.
Tax 14.06(3)(c)
(c) In the event a husband and wife occupy separate dwellings or become divorced during a claim year, household income is determined under s.
71.52 (5), Stats., under Wisconsin income tax law and under marital property law as provided in ch.
766, Stats., except that marital property law does not apply if one of the spouses is not domiciled in Wisconsin during the period of time they occupy separate dwellings. Household income shall be determined as follows:
Tax 14.06(3)(c)1.
1. For the period of time the claimant and the claimant's spouse occupy a common homestead as members of the same household, household income shall include all income of both spouses, even if the “innocent spouse" provisions as provided in s.
71.10 (6) (b) and
(6m), Stats., are in effect for income tax purposes. If the claimant cannot exactly determine the income of the claimant's spouse during the portion of the year they occupy a common homestead, the claimant may make a reasonable estimate of the income and shall clearly indicate it as an estimate on the homestead credit claim.
Tax 14.06(3)(c)2.
2. For the period of time the claimant and the claimant's spouse occupy separate dwellings prior to the issuance of a divorce decree, household income shall include all of the claimant's income and none of the spouse's income, if the spouse is not domiciled in Wisconsin during that time. If the claimant's spouse remains a Wisconsin domiciliary during the period of time the claimant and the claimant's spouse occupy separate dwellings prior to the issuance of a divorce decree, household income shall include all non-marital property income of the claimant and the claimant's portion of marital property income as provided by marital property law, ch.
766, Stats., and by the “innocent spouse" provisions in s.
71.10 (6) (b) and
(6m), Stats. Under marital property law and the “innocent spouse" provisions, the extent to which marital property income during the period of time the spouses occupy separate dwellings is includable in household income depends on whether the claimant and the claimant's spouse notify each other of the amount and nature of marital property income generated by each, as follows:
Tax 14.06(3)(c)2.a.
a. If both spouses notify each other,
1/
2 of all marital property income of both spouses is includable.
Tax 14.06(3)(c)2.b.
b. If the claimant notifies the spouse but the spouse does not notify the claimant,
1/
2 of the marital property income generated by the claimant's services and property and none of the marital property income generated by the spouse's services and property is includable.
Tax 14.06(3)(c)2.c.
c. If the claimant does not notify the spouse but the spouse notifies the claimant, all of the marital property income generated by the claimant's services and property and
1/
2 of the marital property income generated by the spouse's services and property is includable.
Tax 14.06(3)(c)2.d.
d. If neither spouse notifies the other, all of the marital property income generated by the claimant's services and property and none of the marital property income generated by the spouse's services and property is includable.
Tax 14.06(3)(c)3.
3. For the portion of the year after a divorce, household income shall include all income of the claimant only.
Tax 14.06(3)(d)
(d) In order to be valid, the notification referred to in par.
(c) must be made by the spouse whose services or property produced the marital property income, prior to the due date of the Wisconsin income tax return, or if the allowable time for filing the Wisconsin income tax return has been extended, the extended due date.
Tax 14.06(3)(e)
(e) In the event a husband and wife occupy separate dwellings during all or part of a claim year or become divorced during a claim year, each spouse may claim the total amount of property taxes accrued or rent constituting property taxes accrued on the common Wisconsin homestead for the portion of the year they maintain that homestead plus their own amounts for the portion of the calendar year the spouses occupy separate dwellings or are not married to each other. However, as provided in par.
(b), only one of the spouses may claim a homestead credit if they are not divorced or do not occupy separate dwellings on December 31 of that year.
Tax 14.06 Note
Examples: 1) Separation at the end of a claim year. A husband and wife reside in their jointly owned homestead from January 1 to July 31, when the wife moves permanently to a Wisconsin nursing home that is not exempt from property taxes. The husband pays the heat and all the property taxes of $1,200 for the year. Rent paid by the wife for occupancy at the nursing home for the period August 1 through December 31 is $1,000, and the nursing home pays the heat. There are no dependents. Each spouse notifies the other of the marital property income generated by their respective services and properties. Income consists of both non-marital property income and marital property income, as follows:
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See PDF for table Tax 14.06 Note
Both husband and wife are otherwise qualified for the homestead credit. Household income, property taxes accrued, and rent constituting property taxes accrued applicable to each claimant for the year are computed as follows:
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See PDF for table Tax 14.06 Note
2) Separation during a claim year but not on December 31. X and Y are married and live together through April 30. Y moves to another homestead in Wisconsin on May 1 but moves back to X's homestead on November 1 of the same year. Gross rent for the homestead X resides in is $300 per month all year, and gross rent for Y's homestead for May through October is $200 per month. Heat is not included at either dwelling. The income X's services and property generate is $1,000 per month for all 12 months, and the income Y's services and property generate is $500 per month for all 12 months. All income is marital property income, and X and Y both notify each other of the marital property income generated by their respective services and properties. There are no dependents. In this situation, since X and Y are one household at the end of the year, only one may file a claim for homestead credit; household income and rent constituting property taxes accrued for each spouse are computed as follows:
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See PDF for table Tax 14.06 Note
3) Divorce during a claim year. X and Z are married, live together through May 31, and pay gross rent of $400 per month to that date. On June 1 they both move to separate Wisconsin homesteads, and thereafter X pays gross rent of $300 per month and Z pays gross rent of $400 per month. Heat is not included at any of the dwellings. On November 30, X and Z are divorced. The income X's services and property generate is $4,000 through May 31 and $5,000 from June 1 to November 30, and X's income is $1,000 in December. The income Z's services and property generate is $2,000 through May 31 and $3,000 from June 1 to November 30, and Z's income is $2,000 in December. All income of both spouses through November 30 is marital property income. Each spouse notifies the other of the marital property income generated by their respective services and properties. There are no dependents. In this situation, household income and rent constituting property taxes accrued for each claimant are computed as follows:
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See PDF for table
* The income and rent for the time the claimants are members of the same household are reportable on both claims.
Tax 14.06(4)
(4)
Divorce and remarriage during a claim year. Tax 14.06(4)(a)
(a) If during a claim year a person occupies a separate dwelling from his or her spouse, is subsequently divorced, and is remarried to a different spouse and resides with the spouse after the marriage, a new household is established by the person and the new spouse. Under s.
71.53 (1) (c), Stats., either of the new spouses may claim a homestead credit for the year of the marriage but not both.
Tax 14.06(4)(b)
(b) In the event that during a claim year a claimant occupies a separate dwelling from one spouse, is divorced from that spouse, and is remarried to a new spouse, household income with respect to the claimant and the former spouse for the portion of the claim year prior to the claimant's remarriage shall be determined as described in sub.
(3) (c) and
(d). For the portion of the claim year the claimant occupies a common homestead with the new spouse after the remarriage, household income shall include all income of both the claimant and the new spouse.
Tax 14.06(4)(c)
(c) In the event a claimant occupies a separate dwelling from his or her former spouse, is divorced, and is remarried during a claim year, the claimant may claim the total amount of property taxes accrued or rent constituting property taxes accrued on each common homestead for the portion of the year the claimant occupies a common homestead with a spouse, plus the claimant's share of property taxes accrued or rent constituting property taxes accrued for the portion of the calendar year the claimant occupies a separate dwelling from his or her spouse or is not married.
Tax 14.06 Note
Example: X and Z are married and living together, even though a divorce action is pending. X and Z both move to separate Wisconsin homesteads on March 31 and a divorce is granted on April 30. On November 1 of the same year, X marries Y and they share the same homestead for the rest of the year. Z does not remarry during the year. Each individual or couple pays rent for the entire year, and heat is not included at any dwelling. There are no dependents. X and Z notify each other of the marital property income generated by their respective services and properties for January 1 to April 30. Notification between X and Y is immaterial because they do not occupy separate dwellings as husband and wife during the year. Income for each individual and gross rent paid for the year are as follows:
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See PDF for table Tax 14.06 Note
* In this example, all income of each spouse while married to each other is marital property income, and the income listed in each column is the income generated by that person's services and property.
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See PDF for table Tax 14.06 Note
Since X and Y are one household at the end of the year, only one of them may file a claim for homestead credit. Z is also entitled to file a homestead credit claim for the year. Household income and rent constituting property taxes accrued are computed as follows:
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See PDF for table Tax 14.06 Note
* The income and rent for the time the claimants are members of the same household are reportable on each claim filed.
Tax 14.06 Note
Note: In each of the examples in subs. (2), (3), and (4), the spouses notify each other of the amount and nature of the marital property income generated by their respective services and properties. While it is more common for notification not to occur, each example assumes notification for purposes of illustrating the household income computation, which is far more complex under notification than under non-notification situations. In non-notification situations, the claimant merely includes all of the income generated by his or her services and property and none of the income generated by the spouse's services and property while they occupy separate dwellings.
Tax 14.06 Note
Note: Throughout s.
Tax 14.06, it has been assumed that a dissolved marriage was dissolved by a decree of divorce. Under s.
766.01 (7), Stats., the dissolution of a marriage may also be by annulment or decree of invalidity, or by entry of a decree of legal separation or separate maintenance. The computation of household income, property taxes accrued and rent constituting property taxes accrued is the same under any of these types of dissolutions.
Tax 14.06 History
History: Cr.
Register, February, 1990, No. 410, eff. 3-1-90; am. (1) and (3) (c) (intro.),
Register, July, 2000, No. 535, eff. 8-1-00.
