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Exemptions (FAQ)

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  Can property be partially exempt?

Yes, property can be partially exempt under the right circumstances. Property used in part for exempt purposes and in part for an unrelated trade or business for which the owner is subject to income tax under the Internal Revenue Code may be partially taxed on the portion that is attributable to the unrelated trade or business.

State statute section 70.1105 contains requirements for partial exemption. Besides the section 70.1105 requirements, owners seeking partial exemption must be aware of the leasing and rent restrictions in section 70.11's preamble. Wisconsin State Statute 70.11

  If we are a tax-exempt organization for federal income tax purposes, do we automatically qualify for a property tax exemption?

No. Federal income tax exemption (such as 501(c)(3) status) does not guarantee property tax exemption. Income tax exemption is governed by federal law and Internal Revenue Code requirements. Property tax exemption is governed by separate state law concepts and requirements.

Section 4 of the Property Tax Exemption Request form (PR-230) requires the applicant to provide proof of non-profit status. A determination Letter under I.R.C. 501 (c)(3) is one example of proof.

Sec. 70.109 Wis. Stats., provides that exemptions to taxation shall be strictly construed in every instance with a presumption that the property in question is taxable. The burden of proof to qualify is on the person who claims the exemption.

  If my organization currently owns property that is exempt, does additional property acquired by my organization automatically qualify for exemption?

No.  An organization acquiring additional property must submit a Property Tax Exemption Reqeust form (PR-230) for the new property with the local assessor by the March 1 deadline for exemption on that new property. Exemption determinations are made annually. When use or ownership changes so that property may qualify for exemption, an exemption request must be timely filed. Be aware that newly acquired property may cause an owner to exceed statutory acreage limitations on exemption.

  If my organization does not own real estate, must it file an exemption request for its personal property?

Yes. The requirements of state statute section 70.11 apply to both real and personal property.

  Is there a filing deadline?

Yes.  The Property Tax Exemption Reqeust form (PR-230) must be filed with the local assessor on or before March 1 of the year for which exemption is sought.

  What if I miss the deadline?

March 1 is a statutory deadline that must be met to obtain the benefit of property tax exemption. If the deadline is missed, no exemption can be granted for that year.

  Are there any other important dates?

Yes. In Wisconsin, a property's status (taxable or exempt) is determined as of January 1 of each year. January 1 is also important because even if an exemption has been granted for a given year, the assessor may review and even deny the exemption for the following year. The status of the property as of each new January 1 governs whether the property is entitled to exemption for that year.

  Who makes the exemption determination?

While the state legislature created the state statutes creating the exemption categories, the local assessor determines, on a case-by-case basis, whether an owner proved that its property fits within a category and whether the property is thus exempt.

  Is the assessor required to notify me of the determination?

In most cases, the assessor will notify the organization seeking exemption of the determination; however, the assessor is not required to do so.

  What if I disagree with the assessor's exemption determination?

The owner must follow the exclusive procedure set forth in state statute section 74.35. The local Board of Review does not have any authority regarding exemption issues.

  If the exemption is granted, do I have further obligations?

Yes.  By March 31 of each even-numbered year, owners of property exempt under section 70.11 must file a Biennial Tax Exemption Report (Wisconsin form PC-220) with the Assessor's Office describing the property, giving the owner's estimate of its fair market value, and indicating if the property was leased in the preceding two years (section 70.337). This report form is also prescribed by the Department of Revenue and is available online.

By March 15 of each year, any organization that owns property that is exempt under section 70.11 (except property of the state or municipality) and that was used in a trade or business for which the owner was subject to tax under sections 511 to 515 of the Internal Revenue Code must file a report with the clerk of the taxation district detailing the activities and a description of the property used in the trade or business (section 70.339). The required form is prescribed by the Department of Revenue and is available online.

  Why might my exemption application be denied?
  1. Request received after March 1st deadline
  2. Applicant not owner as of January 1st
  3. Ownership in a personal name instead of an organization
  4. Ownership not clear
  5. Application not completed in full
  6. Property use not permissible per zoning code
  7. Over acreage limit
  8. Property use and statutory reference not provided on the form (7a and 7b)
  9. The lessee does not meet exemption requirements
  10. No explanation for reasons for the exemption provided (27) 
  11. Supporting documents not provided with the application (31) 
  12. Bylaws not provided (31) 
  13. Dissolution clause not included in Bylaws (31) 
  14. Application not dated, signed, or notarized
  Can my organization get an exemption on vacant land?

The property must be exclusively used for the exempt purpose of the organization. If the property becomes vacant or is no longer used by the organization for exempt purposes, it loses its exemption.

This issue of vacant property was addressed in Dominican Nuns v. City of La Crosse, 142 Wis. 2d 577, 419 N.W.2d 270 (1987). The order maintained a convent on its property until December 1983, when it moved its headquarters and all of its members to a new facility in another part of the country. The court held that the property was not “used” for any of the order’s exempt activities. Heating the property, keeping it in repair, listing it for sale, and maintaining a mortgage did not make the property “exclusively used” for religious purposes. The former convent was vacant and premises, which are “wholly vacant and unoccupied,” do not qualify for the exemption.

Vacant land held solely for expansion, or acquired for future building, is not exempt even when owned by an exempt organization. However, vacant land adjacent, or in close proximity, to an exempt building, and currently used for exempt purposes, may qualify for an exemption. Consider a church-owned lot located across the street from the church. The lot was used exclusively for church-related outdoor activities such as parking, picnics, socials, recreational activities, etc. The lot was exempt as “land necessary for the location and convenience of buildings.” However, vacant land located a substantial distance from an exempt building is not entitled to exemption.

  Can my organization keep its exemption if the property is leased to another organization?

Leased Property

In 1955, the Legislature revised sec. 70.11(4), Wis. Stats., to require that the property be both owned, and used, by an exempt organization in order to qualify for an exemption. In 2003, Wisconsin Act 195 allowed the renting of property for residential purposes provided it met the strict requirements for use of rental income. 

In 2009, under Act 28, the legislature loosened restrictions on the use of rental income for certain types of residential properties but retained strict limitations on the use of rental income for all other exemptions.

Unrestricted Use of Rental Income

Unrestricted use of rental income applies only to the following exemptions; all other exemptions are subject to the restricted use of rental income criteria below. 

• Benevolent low-income housing 
• Benevolent retirement homes for the aged 
• Residences occupied by at least one person who meets the medical definition of permanent disability are used to determine eligibility for programs administered by the federal social security administration. 
• Property owned by a church or religious institution when leased to exempt educational association or institution

In these instances, leasing property for these specific purposes “does not render it taxable, regardless of how the leasehold income is used”.

  Under which statute do churches qualify for property tax exemption?

Section 70.11(4)(a) exempts:

Property owned and used exclusively by churches or religious, educational, or benevolent associations, or by a nonprofit entity that is operated as a facility that is licensed, certified, or registered under ch. 50, including benevolent nursing homes but not exceeding 10 acres of land necessary for location and convenience of buildings while such property is not used for profit.

  What instructions are available for completing the Property Tax Exemption Request?

Real Property Exemptions

Under state law (sec. 70.11, Wis. Stats.) property is exempt from general property taxes if one of the following applies:
• The property was exempt for the previous year and its use, occupancy, or ownership did not change in a way that makes it taxable.
• The property was taxable for the previous year, and the use, occupancy, or ownership of the property changed in a way that makes it exempt and its owner, on or before March 1, files an exemption with the assessor.
• The property did not exist in the previous year and its owner, on or before March 1, files an exemption request with the assessor.

Except as provided in sec. 70.11(3m)(c), 70.11(4)(b), 70.11(4a)(f), and 70.11(4d), Wis. Stats.:
• Leasing a part of the property described in this section does not render it taxable if the lessor uses all of the leasehold income for maintenance of the leased property or construction debt retirement of the leased property, or both, and, except for residential housing, if the lessee would be exempt from taxation under this chapter if it owned the property. Any lessor who claims the leased property is exempt from taxation under this chapter shall, upon request by the tax assessor, provide records relating to the lessor's use of the income from the leased property.
• Leasing all or part of the property owned by a church or religious association or institution to an exempt educational association or institution, regardless of how the lessor uses the leasehold income.

Owners seeking an exemption for the current assessment year, are required to file the Property Tax Exemption Request form (PR-230) along with any necessary attachments. Failure to complete the form in its entirety may result in denial of the exemption. The completed form and attachments must be filed with the assessor in the taxation district where the property is located by March 1 to be eligible for the current assessment year. Filings received on or before March 1 by electronic filing, fax, mail or physical delivery are timely. If March 1 is a Saturday or Sunday, state law (sec. 990.001(4), Wis. Stats.), allows taxpayers to file on the next day that is not a Saturday or Sunday. Under this situation, filings received on or before the next day that is not a Saturday or Sunday by electronic filing, fax, mail, or physical delivery are timely. The status of the property as of the current January 1 assessment date determines eligibility for the current year. The filing requirement applies only to new exemption requests – owners of properties already exempt are not required to complete another request unless there is a change in use, occupancy, or ownership of the property.

Some entities are not required to file a Property Tax Exemption Request form. These include:
• Property of the State Sec. 70.11(1), Wis. Stats
• Municipal property Sec. 70.11(2), Wis. Stats.
• Housing Secs. 66.12012(22), 70.11(18), Wis. Stats.
• Crops Sec. 70.11(30), Wis. Stats.
• Manufacturing machinery & specific processing equipment Sec. 70.11(27), Wis. Stats.

The Property Tax Exemption Request form (PR-230) compels an owner seeking exemption of property to provide the assessor with pertinent information to enable the assessor to determine whether the property meets the statutory requirements for exemption. The form has four sections that must be completed by the property owner or the owner’s representative.
1. Applicant information
2. Subject Property Information
3. Tenant Information
4. Supporting documentation. Depending on the type of exemption, supporting documentation must be attached to the request. Examples include copies of:

Proof of non-profit status

Mortgages

Partnership agreement, association documents, articles of incorporation, charter, by-laws, any amendments

Covenants, restrictions, rules, and regulations affecting use and occupancy

 

 

Latest annual report filed with the State Department of Financial Institutions

 

Survey of the subject property

Educational curriculum

Income data to support an exemption for low-income housing

Part II of IRS Form 1023

Appraisal of the subject property

Form 990

Deeds

Form 990T

Concessionaire and license agreements

Ordination papers of occupants

Any other information that would aid in determining exempt status

Leases and subleases

 

Sec. 70.109 Wis. Stats., provides that exemptions to taxation shall be strictly construed in every instance with a presumption that the property in question is taxable. The burden of proof to qualify is on the person who claims the exemption.

Nicole F. Larsen

Commissioner of Assessments


 414-286-3651


Web Request: Ask the Assessor


@ Assessor@milwaukee.gov


 City Hall, 200 E. Wells Street, Room 507, Milwaukee, WI 53202


 Monday - Friday, 8:00 AM - 4:45 PM


 

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