While the cold winters may not be the best part of Wisconsin, the state is certainly known for its dairy production, and particularly, its amazing cheese. If that doesn't tickle your fancy, then perhaps the signature beer will grab you, alongside a ton of outdoor activities if you're a nature lover.
These are just a few of the reasons why you may find purchasing property in the state appealing. Why wouldn't you? It's a great place and can be the next step in moving your portfolio forward. Maybe you're interested in renting it out to enjoy a mostly passive income, particularly if you're supported by a good property manager.
Whatever your intentions may be, investors know that they need to understand the legalities that govern their holdings, as well as the potential risks that they may need to keep in mind. In this case, the focus will be on taxes. Like any other state, considerations such as income or sales tax will apply depending on what you are involved in.
Similarly, Wisconsin property tax rates will apply to homeowners. Since 1830, personal property tax would apply alongside real property taxes, however, that is no longer the case.
It's not that personal property taxes have been abolished. However, since its original inception, it has been the subject of numerous exemptions, leaving it as a shell of its former self. Today, only businesses are subject to that tax bill.
With that said, you only have your real property tax rate to focus on and that's what we're gonna be going through here today. Sure, you know that it's a requirement, but to what extent do you know what you need to be doing? When are you expected to pay? What kind of property tax credit options are there? What happens if you're late on your payments? How is the figure even calculated? What payment methods can you use to ensure you meet your legal obligation?
It can be a lot to think about, but we're about to demystify it for you. By the time you're done, you'll have a working understanding of the whole thing.
How Many Times Do You Pay Property Taxes a Year in Wisconsin?
Starting on a simple note, when are you expected to pay your property taxes? Well, they become due on January 31. However, you can choose from one of two different tax schedules, which will govern what your actual payment schedule will be.
The first option is to pay everything by January 31. However, if you want a little more flexibility and convenience, you could go for the second option, which is an installment plan. Here, you would pay your property taxes in two equal installments. The first is due by January 31, with the second being due by July 31.
Consequences of Late Payments
This is a good time for us to point out that the existence of an installment option isn't absolute. There is a threshold of $100. If your property tax bill is below that, then you need to pay it all at once by January 31. Note as well that Wisconsin law does allow you to pay proactively if you so desire. If you want to go this route, then your payments can be submitted between August 1 and the third Monday in December annually.
Your property taxes are considered late if they do not come in by the established due dates, depending on the applicable payment schedule. In this case, a 1% penalty will be applied monthly, starting on February 1, and this will continue until the tax bill is settled. Note, however, that not all counties abide by this 1% rule. You'll find that some of them will instead apply a 1.5% penalty.
For the purpose of calculation, a fraction of a month counts as a whole month. In other words, once the new month begins, the penalty rate will immediately be applied. Should you fail to pay your property taxes at all, you run the risk of losing the property in a tax sale.
Finally, ignorance is not accepted as an excuse for non-payment under Wisconsin property tax law. Therefore, if you do not receive your tax bill, this will not be accepted as an excuse for why it has not been paid. With that in mind, you're advised to contact your County Treasurer if you do not receive your tax bill as expected.
How to Pay a Property Tax Bill in Wisconsin
The way you pay your property taxes will depend on the city that you're in. However, you will find that the options available are very similar, regardless of where you are. With that said, we'll use Madison, WI as an example. Here, the payment methods are as follows:
- Online - This is one of the more convenient options you have and it allows you to make your payments via debit card, credit card, savings account, or checking account. Additionally, you're allowed to schedule future payments, look at assessment details, see your tax history, and even handle bills for multiple properties. While there is no charge for using a checking or savings account, if you should use a debit or credit card, a 2.45% fee will apply, with a minimum of $3.50.
- Mail - The check would need to be made payable to the appropriate treasury. In this case, that would be the City of Madison Treasury. The bottom portion of the tax bill would also need to be mailed. Escrow checks need to be endorsed at the back and if it should exceed the amount of the tax bill, the remainder is reimbursed within six weeks.
- Phone - Property taxes can be paid over the phone with the assistance of an automated and interactive service. The phone numbers for real estate and personal property taxes are different, so it's good to know which one you need.
- In-person - If you want to physically visit the treasury department, this is also an option, and you are allowed to make these payments via check, cash, or money order.
- Dropbox - The final option is also physical but offers a bit more convenience. Taxpayers are allowed to simply drop check payments in a drop box that will be cleared and applied later.
Note that the payment date for postmarked tax payments will be the date of the actual postmark.
How Much Is Property Tax in Wisconsin
Taxes in Wisconsin will be based on two important numbers. The first is the assessed value of the property, with the second being the total property tax rate.
The former is annually calculated by local assessors in respective tax districts. It's expected that the assessed value will be close to the market value of the home, but there are some areas in which there are great variances that go as high as 25%. Therefore, the state will annually equalize district values, with an assessment ratio being calculated for each one.
Using the assessment ratio, homeowners can then determine the extent to which the property's assessed value is accurate or not.
How Can I Lower My Property Taxes in Wisconsin?
While taxes such as property taxes are needed by local governments to carry out infrastructure developments and handle other key functions, the burden they can put on homeowners is great. Therefore, you may be inclined to ask what you can do to reduce the extent of this burden. There are a few options that you can explore.
Appeal Your Assessment
If you feel that the assessed value of your home is too high, then you can go through an appeal process to try to have it reduced. Remember that the assessment ratio exists for this very reason.
For example, imagine that your home's assessed value is $200,000 and you've been given an assessment ratio of 0.50. In this case, the market value should be somewhere around $400,000, which would be the assessed value divided by the assessment ratio.
Using Milwaukee County as an example, you can file assessment appeals with the Board of Assessors in Milwaukee or the local Board of Review.
Look into Disaster Relief
You may be able to get property tax relief if there has been a disaster that has either damaged or destroyed your home, especially if the governor has declared a state of emergency.
Look into Tax Exemptions
Tax exemptions and credits are another solid option since they can reduce the amount of property taxes that you have to deal with as a homeowner. For example, there is the School Levy Tax Credit, which is given to anyone paying property tax with a home that has a certain value and is based in a school district.
As far as exemptions go, the homestead credit is an example, easing the tax burden for homeowners who fall within a low-income bracket.
As a homeowner in Wisconsin, property tax payments are mandatory for all real property. However, the variables that go into keeping your account current are not always the most straightforward. The onus is on the homeowner to know when to pay, where to pay, how much to pay, etc.
Use all the information provided above and seek the assistance of a tax professional where necessary to keep yourself compliant.
If you're looking for more tips on property management accounting, check out our whitepaper on the best tips for simplifying this complex process.