Below is a listing of general tax information. To see more information on each category, click to expand more details.
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Real property is defined as land and any permanent structures attached to it. Some examples of real property are:
- Houses
- Office Buildings
- Vacant Land
- Gas Stations
- Motels
- Shopping Centers
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- Farms
- Apartment Buildings
- Factories
- Restaurants
- Manufactured Housing
- Saleable Natural Resources
(Oil, Gas, Timber)
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All real property commonly known as real estate is assessed. KRS.132.690 states that each parcel of taxable real property or interest therein subject to assessment by the property valuation administrator shall be assessed annually by the PVA at its fair cash value in accordance with standards prescribed by the Revenue Cabinet. Real property shall be physically examined no less than once every four years by the PVA or his assessing personnel.
The PVA office uses Field Representatives to collect data. We receive information from several different sources:
1. The Building Inspector provides a list of permits as they are issued. These have all improvements such as additions, garages, multiple dwellings (duplexes, apartments, condos), new businesses, pools and manufactured home placements.
2. On site visual inspections such as required for quadrennial plan and physically checking each parcel for improvements.
3. Property owners
A Field Representative is responsible for going to the site, listing all improvements, measuring all structures and taking photos of said improvements. Interior specs are gathered from on site discussion with the owner or occupant. If no one is on site the field rep will estimate interior specs and leave a card for the owner to fill out and return to the PVA office with information on the structure.
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How is Real Property Assessed?
Market Value is how much property would sell for, in an open market, under normal conditions. Before assessing any parcel of property, the assessor estimates its market value. To estimate market values, the assessor must be familiar with all aspects of the local real estate market, such as: what different properties are selling for, local construction and repair costs, normal operating expenses, typical rents, and current financing charges for borrowing money to buy or build property.
A property's value can be determined in three different ways:
- Property is compared to others similar to it that have sold recently, using only sales where buyer and seller both acted without undue pressure. This method is called the market approach and is normally used to value residential, vacant, and farm properties.
- The second way is to calculate what it would cost, using today's labor and material prices, to replace the structure with a similar one. If the structure is not new, the assessor determines how much is has depreciated since it was built. The resulting value is added to an estimate of the market value of the land. This method is used to value special purpose and utility properties, and is called the cost approach.
- The third way is to analyze how much income a property, like an apartment building, a store, or a factory will produce if rented. Operating expenses, insurance, maintenance costs, financing terms, and how much money owners expect to make on this type of property, are considered. This is the income approach.
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Section 172 of the Constitution of Kentucky requires that all property be assessed for taxation at its fair cash value. The assessment date is January 1 of each year. Fair cash value is defined as the price a piece of property would bring with a voluntary sale and a willing buyer and seller.
When a value of real property changes from the previous year's assessment, the Property Valuation Administrator is required to send the property owner a notice of change. When property owners disagree with the new assessed value, the first step in the appeals process is to schedule a conference with the Property Valuation Administrator or Deputy.
A property owner must schedule a conference prior to the end of the tax roll inspection period. This affords the property owners the opportunity to review all assessments for the current year. The tax roll inspection period is normally scheduled to begin the first Monday in May and continue for 6 days per week for the next two weeks and ends the third Monday in May. Sometimes this schedule may be adjusted if reassessment work in a particular county requires extra time. You will always be notified by mail if your assessment value changes.
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Government Owned Property
Property that is both publicly owned and used for a public purpose is exempt from property taxation under the constitution. The property must meet both requirements before an exemption can be granted.
Examples:
- Municipal Buildings
- Water treatment plants
- Courthouses
Educational Institutions
To qualify for a property tax exemption under this classification an institution must:
- Be non-profit
- Have its funds used exclusively for education and
- Be located within Kentucky
The Court of Appeals has defined an institution of education as a place where systematic instruction in any and all useful branches of learning is given by methods common in schools and institutions of learning.
The education exemption extends to any income producing property that may be owned by the institution provided the income is used to further its educational programs.
When an organization requests an exemption they need to request an application from the Property Valuation Office.
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The Homestead Exemption (based on age or disability status)
Allows taxpayers who are at least 65 years of age or who are totally disabled to receive an exemption.
The following requirements must be met in order to claim the homestead exemption:
- The taxpayer must both own and maintain the property as his or her personal residence as of January 1st;
- The taxpayer must have been classified as totally disabled under a program authorized or administered by an agency of the United States Government, the Railroad Retirement System or any retirement system either within or outside the state of Kentucky on January 1st for the year in which the application is made and maintain the disability classification through December 31st;
- The taxpayer must be receiving disability payments pursuant to that disability classification; and
- An application for the disability exemption must be made on an annual basis.
*The most common government agency under which a taxpayer can obtain a totally disabled classification is Social Security / SSI. Other programs include the Tennessee Valley Authority, the Veterans Administration and the Teacher's retirement System. Disability payments from any type of retirement system, both publicly and privately sponsored, will qualify the taxpayer for the exemption.
How to Apply
An application must be completed and filed in the Property Valuation Office along with documentation verifying age. Appropriate documentation might include Medicare cards issued by Social Security, birth certificates, and driver's license. When applying for the disability homestead, the same form will apply. However, documentation verifying total disability and that payments have been issued throughout the entire year must follow. Because of this, a taxpayer needs to provide proof of his or her disability status in the month of December.
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Agricultural Land Use
The Kentucky Revised Statute 132.010 (9, 10, 11) defines agricultural land as any tract of land, including all income producing improvements of at least 10 contiguous acres in area used for the production of livestock, livestock products, poultry, poultry products and/or the growing of tobacco and/or crops including timber, or where devoted to and meeting the requirements and qualifications for payment pursuant agricultural programs and an agreement with the state or Federal government.
The state provides a property tax break to farmers whose land use falls under this provision.
Taxpayers must notify the PVA of such land use.
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Tangible personal property is physical property, usually movable, that has value and utility in and of itself (examples: trade tools, fixtures, office equipment, inventory). In determining whether an item is real property or tangible personal property, the following aspects must be considered:
- The manner in which the item is fixed or attached to the real estate.
- The intention of the party who attached the item.
- The purpose for which the premises are used.
Generally, items remain personal property if they can be removed without damage to the real estate or to the item itself. Machinery bolted to the floor to prevent movement while in operation would remain personal property. If the machinery were built into the building in such a manner that its removal would produce considerable damage to the building, it would be part of the real estate.
All individuals and business entities who own, lease, or have a beneficial interest in taxable, tangible property located within Kentucky on January 1 must file a tangible property tax return. All tangible property is taxable, except the following:
- Personal household goods used in the home
- Crops grown in the year which the assessment is made and in the hands of the producer.
- Tangible personal property owned by institutions exempted under Section 170 of the Kentucky Constitution.
The taxable situs of tangible personal property in Kentucky are the Counties where the property is physically located.
Another way to define tangible personal property is that it is every physical item subject to ownership except real and intangible property.
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The centralized system for property tax assessments on motor vehicles is a piggyback program supported by the Automated Vehicle Information System (AVIS). AVIS contains ownership records and various facts on motor vehicles and is maintained by the Transportation Cabinet.
Information is entered and maintained through online computer terminals located in each County Clerk's office and in each PVA office. Vehicles registered with the County Clerk are also listed in the PVA. Boats are now included in the AVIS system and are registered in the same manner as other motor vehicles. This registration process leads to a property assessment based on values determined by the trade-in value of the property.
It is the responsibility of the PVA office to value vehicles missed by the online computer and to correct the values of those that were incorrectly valued and enter such values into the system via the terminals in the PVA office. Determining taxable status is also a PVA responsibility according to KRS 132.487 (5) and KRS 133.110. The PVA is required to manually correct various records if transfer of ownership, address change, or titling requirements have not been done. The PVA is under the supervision of the Revenue Cabinet and, along with all deputies, must comply with policies, laws, and procedures required by the Revenue Cabinet.
The assessment date for vehicles is January 1st. The taxable situs of a motor vehicle is presumed to be the county of registration as of the assessment date (KRS 132.227). The PVA office uses the following guides to determine a value for a vehicle using the trade-in value:
- Late model used cars one to seven years old, NADA Value Guides, Official Used Car Guide.
- Automobiles and light trucks 8-18 years old, NADA Appraisal Guides, Official Older Car Guide.
- Heavy and medium duty trucks, National Market Reports, The Truck Blue Book.
- Motorcycles, NADA Appraisal Guides, Motorcycles/Snowmobile/ATV/ Personal Watercraft Guide
- Recreation vehicles and camping trailers, NADA Recreational Vehicle Appraisal Guide.
- Commercial trailers, Department of Property Taxation, Appraisal Guide Heavy Duty Trailers.
- Boats, boat trailers, and motors, NADA Marine Appraisal Guide, ABIS Marine Blue Book.
The assessment of all motorboats as defined in KRS 235.010 shall be administered in the same manner and according to the same procedures provided for motor vehicles in KRS 132.487.
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