October 27, 2023

To: Certified Assessors, Public Assessor List, County Real Property Listers, Treasurers, Clerks, Registers of Deeds, Municipal Clerks and Treasurers

The Wisconsin Department of Revenue (DOR) is providing clarification on the following topics, specifically for assessors.

Use of Sales to Update Assessments

• Annually verify each sale to determine whether it's valid and if a usable arm's length transaction for assessment purposes
  • Non-maintenance type assessment – apply usable sales throughout the municipality to determine uniform and full taxable values only during non-maintenance type assessments
  • Maintenance assessment – apply usable sales to determine level of assessment and degree of uniformity and whether to recommend a revaluation to the municipality. The sales are not used to update assessments, sale of the subject or otherwise, during a maintenance assessment.
• If sales are not available to determine full taxable values during a non-maintenance type assessment – consider all factors that, according to professionally acceptable appraisal practices, affect the value of the property to be assessed as provided by sec. 70.32, Wis. Stats., and case law (State ex rel. Markarian v City of Cudahy, 45 Wis.2d 683, 173 N.W.2d 627 (1970).)
• See the Wisconsin Property Assessment Manual for additional information
  • Chapter 9 Real Property Valuation
    • Pages 9-9 to 9-10 – "Changing the values of properties in certain neighborhoods while not adjusting the values in other neighborhoods, particularly when sales activity shows relative values are changing, fails the uniformity test. Singling out specific properties as a result of a sale of the subject, while not addressing all properties, would be another arbitrary method of assessment resulting in nonuniform assessments."
    • Page 9-23 – "Assessors, and appraisers valuing property for assessment purposes, must use the 'Markarian hierarch' in valuing real property. The Markarian hierarchy requires assessors to first use a recent arm's length sale of the subject property. If there is no such sale, the next step is to use recent comparable sales of other properties. Only if there are no recent comparable sales of other properties should the assessor proceed to other indicators of value that include the income and cost approaches to value."
  • Chapter 10 Assessment/Sales Ratio Analysis
    • Page 10-24 – "A major objective of assessment/sales ratio studies is to determine the degree of assessment uniformity. This measure of assessment performance is gauged by looking at the level of assessment and the degree to which individual assessments differ from that level."
  • Chapter 22 Legal Decisions
    • Page 22-25 – Summary of State ex rel. Markarian v City of Cudahy, 45 Wis.2d 683, 173 N.W.2d 627 (1970).

Determining if Property is Real or Personal

• First apply state law:
  • Sec. 70.03, Wis. Stats. – defines real property, in summary, as the land and all buildings, improvements and fixtures located thereon
  • Sec. 70.04, Wis. Stats. – defines personal property, in summary, as goods, wares, chattels not included in real property as defined in sec. 70.03, Wis. Stats.
  • Sec. 70.17(3), Wis. Stats. – requires real property assessment of buildings, improvements and fixtures on leased land, exempt land and DNR forest program land
• Then apply state court cases that provide a three-factor test to determine real property:
  1. Actual physical annexation to the real estate – is the property attached to the walls and foundation of a structure, and/or built into the structure?
  2. Application or adaptation to the use or purpose to which the realty is devoted – is the building and property in question adapted to the same purpose of the real property?
  3. Intention on the part of the person creating the annexation to make the item a permanent part of the realty – would the average person under similar circumstances intend to make the property permanent?
• See DOR's Personal Property Exemption Common Questions for additional information

Creating a Parcel – initiated by the municipality or property owner

• State law (sec. 70.27, Wis. Stats.) provides a process for the municipality to create a parcel through an assessor's plat
  • Assessor's plat – is an existing process under state law for a municipality to create a plat recorded with the register of deeds (ROD) containing separate parcel numbers and legal descriptions for each property identified in the plat
  • Act 12 amended sec. 70.27, Wis. Stats. – to allow this process for buildings, improvements, and fixtures that are on leased land, exempt land, forest cropland, and managed forest land along with mobile homes not subject to a parking permit fee or otherwise exempt
• Property owners – may also create parcels through a metes and bounds description, certified survey map, subdivision plat, or condominium plat that contain parcel descriptions and are recorded with the ROD
  • Contact the local zoning and land information offices for regulations and restrictions that may impact the process to create separate parcels for buildings, improvements, and fixtures
  • After recording at the ROD the county real property lister provides a parcel number and then the assessor lists and values each parcel separately on the assessment roll
• NEW: building (s), fixture (s), or improvement (s) recording document – available for sec. 70.17(3) Wis. Stats. and:
  • Creating a new parcel for the building(s), fixture(s), and/or Improvement(s)
  • Transferring building(s), fixture(s), and/or improvement(s)
  • Adding building(s), fixture(s), and/or improvement(s)
  • Removing building(s), fixture(s), and/or improvement(s)
  • See Register of Deeds Association website for the statewide template
• See DOR's Personal Property Exemption Common Questions for additional information

We hope you find this information helpful. If you have questions, contact us at bapdor@wisconsin.gov.