Wis. Admin. Code § Tax 14.05 — Gross rent and rent constituting property taxes accrued

Tax 14.05(1) (1) Purpose. This section clarifies the terms “gross rent” and “rent constituting property taxes accrued” as the terms apply to homestead credit claims.

Tax 14.05(2) (2) Definitions.

Tax 14.05(2)(a) (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.”

Tax 14.05(2)(b) (b) “Rent constituting property taxes accrued” has the meaning specified in s. 71.52 (8) , Stats.

Tax 14.05(3) (3) Rent payments.

Tax 14.05(3)(a) (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.

Tax 14.05(3)(b) (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.

Tax 14.05(3)(c) (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.

Tax 14.05(4) (4) Verification of rent constituting property taxes accrued.

Tax 14.05(4)(a) (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.

Tax 14.05(4)(b) (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.

Tax 14.05(4)(c) (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.

Tax 14.05(4)(d) (d) Under s. 71.55 (2) , Stats., a landlord is prohibited from charging a fee for completing the rent certificate.

Tax 14.05(4)(e) (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 .”

Tax 14.05(4)(f) (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.

Tax 14.05(5) (5) Effect of relief and other public assistance.

Tax 14.05(5)(a) (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.

Tax 14.05(5)(b) (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) .

Tax 14.05(6) (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.

Tax 14.05(7) (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.

Tax 14.05(8) (8) Exempt housing.

Tax 14.05(8)(a) (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) .

Tax 14.05(8)(b) (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.

Tax 14.05(8)(c) (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.

Tax 14.05(8)(d) (d) Types of tax-exempt housing other than housing authorities include:

Tax 14.05(8)(d)1. 1. Federal low-income housing under the housing and urban development, or “H.U.D.” program.

Tax 14.05(8)(d)2. 2. Student dormitories owned by nonprofit educational institutions.

Tax 14.05(8)(d)3. 3. Housing units of religious organizations.

Tax 14.05(8)(d)4. 4. Charitable, nonprofit nursing homes.

Tax 14.05(9) (9) Joint occupants of rental units.

Tax 14.05(9)(a) (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.

Tax 14.05(9)(b) (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.

Tax 14.05(10) (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.

Tax 14.05(11) (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.

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(13) (13) Low-income housing.

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(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) (14) Nursing homes and long-term care facilities.

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(14)(a)3. 3. Any other appropriate method, subject to prior approval by the department.

Tax 14.05(14)(b) (b)

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.