How is the value of property assessed for tax purposes in your state? Which types of property are subject to tax?
All classes of property in Kentucky are subject to taxation, unless exempted by the state constitution or by statute. All taxable property must be listed annually, valued and assessed in the county where it is located as of January 1 of each year. Property is assessed at its fair cash value, estimated at the price that it would bring through a fair and voluntary sale. Property is also valued at fair market value, determined by using one, or a combination, of the leading three methods (Kentucky Revised Statutes (KRS) 132.191(2)):
- cost approach (reproduction or replacement);
- sales or market approach; or
- income/capitalization approach.
What is the state property tax rate?
Property tax rates vary according to how the property is classified and are set annually by the Department of Revenue. The 2017 state rate for most real estate was $0.122 per $100 of value, with interstate railroads and leasehold interests subject to a state rate of $0.10 per $100 and $0.15 cents per $100, respectively.
The state tax rate for tangible property without a specially defined rate is $0.45 per $100 of value (KRS 132.020). State tax rates lower than $0.45 per $100 apply to:
- certain privately owned leasehold interests;
- qualifying voluntary remediation property;
- unmanufactured agricultural products;
- farm machinery;
- tangible personal property located in an activated foreign trade zone;
- machinery engaged in manufacturing;
- commercial radio and television equipment;
- certified pollution control facilities;
- certified alcohol production;
- historic motor vehicles;
- certain railroad property;
- certain aircrafts; and
- certain vessels.
What is the range of local property tax rates levied in your state?
The typical real estate tax rates in cents per $100 are:
- school districts—65¢; and
- special tax districts—10¢.
Exemptions and deductions
What exemptions and deductions are available?
Section 170 of the Kentucky Constitution provides exemptions from property tax to government-owned property, educational institutions, religious institutions, public libraries, public cemeteries, and purely public charities. Tangible personal property (e.g., inventory) placed in a warehouse or distribution center for the purpose of subsequent shipment to an out-of-state destination is exempt (KRS 132.097 and KRS 132.099).
Tangible personal property subject to special lower state tax rates may also be exempt from local taxes (KRS 132.200).
What filing requirements and procedures apply?
Real property owners must list their property with the county Property Valuation Administrator (PVA) between January 1 and March 1; however, as a practical matter, property owners do not typically file forms with the local PVA.
Tangible personal property owners must list their property and file a tangible property tax return with the PVA between January 1 and May 15.
Real estate transfer tax
How is the transfer of real estate taxed in your state (including tax base, rates, exemptions, and filing formalities)?
A tax imposed on the transfer of real estate at a rate of $0.50 per $500 of value based on the value of the transferred property as set forth in the deed. The tax is collected by the county clerk as a prerequisite to recording the deed. Kentucky’s real estate transfer tax does not apply to the following types of transfer (KRS 142.050):
- by gift;
- between spouses;
- on partition;
- on sale for delinquent taxes;
- pursuant to a business merger, consolidation, conversion, or upon formation;
- between trustees;
- from a trustee to a beneficiary; or
- in order to provide or release security for a debt or obligation.