Discussion:Wisconsin Nonresident Taxation

I am a nonresident of WI, sold a vacation home at a profit. From what I've done so far, it APPEARS that I will end up paying to WI, tax on 40% of my LTCG. Also, it looks like I might be able to take a credit for the interest that I've paid on the mortgage in 2007. Is this correct? (I know what to do on the IL side).

Also, just in case I missed something, is there any sort of WI tax loophole that will allow me to defer the gain on this sale since I replaced it with a more expensive WI vacation home? I haven't been able to find one but of course it would make me very happy to do so.

TIA for any help at all on this one.

Example 1: While a nonresident of Wisconsin, you sell 100 shares of ABC Corporation stock and land located in Wisconsin. Your gain on the sale of stock is $5,000, and your gain on the sale of land is $2,500. Only the $2,500 gain on the sale of land located in Wisconsin is includable in Wisconsin income.

Yes, you will end up paying to WI, tax on 40% of my LTCG.

Is there any sort of WI tax loophole that will allow me to defer the gain on this sale since I replaced it with a more expensive WI vacation home? NO

If the total of certain itemized deductions claimed on your federal return exceeds the Wisconsin standard deduction, you will get a credit against the tax. The credit is calculated on Schedule 1 on page 4 of Form 1NPR. The allowable itemized deductions include medical expenses (except for medical insurance and long-term care insurance premiums that were deducted for Wisconsin purposes), interest, and charitable contributions. Interest on a second home is deductible if the home is in Wisconsin. You just have to go through the computation to see if you are entitled to a credit.

Wisconsin, like most states that have graduated tax rate schedules, calculates the tax on your total income and prorates it by the ratio of Wisconsin source AGI to total (federal) AGI. The result is to tax your Wisconsin source income at the same average rate that would have applied if you had been a Wisconsin resident, subject to tax on all of your income. Illinois will give you credit for the tax you pay to Wisconsin, but the Illinois credit will be limited to the Illinois tax on that income.

No way out; pay the tax.