Real property is defined as land and any permanent structures attached to it. Some examples of real property are:
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:
The County Building & Electrical 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. The City also provides permits for such improvements (new homes, manufactured housing placement).
On site visual inspections such as required for quadrennial plan and physically checking each parcel for improvements.
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.
The Field Representative is also responsible for keeping track of all manufactured housing placement in the county and city. Information on the manufactured house should include the owner's name, mailing address, make, model and year. The field rep checks every year to see if the manufactured home has been removed from the site, is new on the site or has had any improvements made during the year. Manufactured home parks are required by law to fill out forms yearly that list owners names and information on the home.
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.
APPEAL PROCESS FOR REAL PROPERTY ASSESSMENTS
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.
The reassessment notices are mailed out prior to the beginning of the inspection period, annually. If the property owner wishes to discuss the assessment they can schedule a conference as soon as possible after the notice is received.
At the conference, the PVA or a designated Deputy will explain how the new assessment was derived. All information used in the reassessment should be presented to the property owner. The property owner must be prepared to show evidence to support their opinion of the value of their property.
Examples are:
It is desirable that the conference between the property owner and PVA be in person but sometimes that is not feasible. In a case like this a conference can be permitted by telephone.
Usually disagreements are resolved at these conferences by the property owner understanding more about the assessment process and accepting it or the PVA accepting the decrease due to documentation provided by the property owner or discovering an error in the PVA records. When a conference does not end in agreement, the property owner can file and assessment appeal with the
The Kentucky Revenue Cabinet (KRC) also has a Taxpayer Ombudsman's office which consists of the Ombudsman and a staff whose job is to serve as an advocate for taxpayers' rights. One of the main functions of the office is to ensure that your rights as a
The Ombudsman's Office is your advocate and is there to make sure your rights are protected. If you think you are not being treated fairly or if you have a problem or complaint, please contact the Ombudsman's Office so they can help you.
The Ombudsman's Office may be contacted by telephone at (502) 564-7822 between 8:00 AM and 4:30 PM weekdays. From a Telecommunication Device for the Deaf (TDD), call (502) 564-3058. The mailing address is:
Office of the Taxpayer Ombudsman
A written record is maintained by the PVA of each conference held. Upon completion of the conference with the PVA, a copy of the written summary results may be provided to the property owner. This copy is to be retained by the property owner and presented to the
The property owner must obtain and complete an appeals form from the
The last date to file an appeal is one working day after the close of the inspection period. For instance, if the inspection period closes on the third Monday of May, then all appeals must be filed in the Clerk's office by the close of business on the third Tuesday in May.
All real property assessment appeals are heard by a three-member panel known as the Local Board of Assessment Appeals. The Board is comprised of three local residents who are knowledgeable about real estate values in
The hearings at the local level are informal. Property owners do not have to hire an attorney or professional representative; however, they can have representation if they desire to do so. Any compensated representative of a property owner must be an attorney, a certified real estate appraiser, a
Also, the representative must present written authorization from the property owner which states the professional capacity of the representative and it must also state any personal interests the representative may have in the outcome of the appeal, including any contingency fee arrangements. If the representative is an attorney, any contingency fee DOES NOT HAVE TO BE DISCLOSED.
At the hearing, the PVA will present information in support of the assessment and the property owner must present factual evidence to support his or her claim of value.
A property owner can have a conference with the PVA without providing any documentation but an appeal will be denied if the taxpayer has been asked to present information by the PVA, Revenue Cabinet, or the board, and fails to do so.
A decision will not be made immediately by the board. The property owner will be notified by Certified Mail of the board's decision. If the property owner is dissatisfied with the local board's ruling, an appeal can then be filed at the State level with the Kentucky Board of Tax Appeals (KBTA).
PROPERTY TAX EXEMPTIONS
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:
To qualify for a property tax exemption under this classification an institution must:
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.
Click here for forms.
In 1990 legislative session, the General Assembly developed a constitutional amendment which expanded the exemption that could be granted to church owned property. The specific language of the amendment, as approved by the voters of
Real property owned and occupied by, and personal property both tangible and intangible owned by institutions of religion.
Examples:
The amendment now allows an exemption to be granted for all personal property owned by a church. This includes all motor vehicles, equipment and investments that are held in the church's name.
The key issue to determine if a church is occupying a parcel of land is the use of the property.
In order to be recognized as a purely public charity an institution must:
The courts have defined a public charity as whatever is done or given for the relief of public burdens or for the advancement of the public good. Where the public is the beneficiary, the charity is public.
Examples:
The 1990 General Assembly amended KRS 132.195 says that when exempt real or personal property is leased to a business conducted for profit and a leasehold interest exists, that interest should be assessed to the lessee.
Section 170 of the Constitution specifies that only places of burial not held for private or corporate profit are to be exempted. Any income producing property must be placed on the tax roll even if the income generated is used to maintain the cemetery.
AGE / DISABILITY EXEMPTION
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 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.
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.
AGRICULTURAL EXEMPTION
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.
Defined as horticultural land is any tract of land, including all income producing improvements of at least 5 contiguous acres in an area commercially used for the cultivation of a garden, orchard, or the raising of fruit or nuts, vegetables, flowers or ornamental plants.
The state provides a property tax break to farmers whose land use falls under either provision.
Taxpayers must notify the PVA of such land use.
TANGIBLE PROPERTY
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:
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
The taxable situs of tangible personal property in
Another way to define tangible personal property is that it is every physical item subject to ownership except real and intangible property.
Do not send payments with your return. The Sheriff in each county mails the tax bills.
Returns filed after May 15 are considered omitted and will be billed by the Division of State Valuation.
MOTOR VEHICLE TAX
The centralized system for property tax assessments on motor vehicles is a piggyback programs 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
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 vial 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:
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.
The PVA may adjust values based upon the condition of the vehicle on the assessment date of the tax year. The PVA may adjust the NADA value if the vehicle is not considered to be in average condition in comparison to other vehicles of the same age and make. Adjustment for condition may be one or a combination of the following:
To adjust for mechanical damage, the PVA must receive an estimate for cost of repairs needed to put the vehicle in average condition. This estimate must be dated prior to January 1 of the assessment year.
To adjust for high mileage, evidence of high mileage on January 1 of the tax year must be provided. A form of documentation would be the receipt from having the oil changed in January.
Diesel Engines are identified within the VIN.
Vehicles which have a salvage title on January 1 of the tax year shall be assessed no more than 25% January NADA retail value (ref. KRS 186A.335). Owner must present the salvage title to the PVA for viewing.
Errors in assessment due to incorrect Vehicle Identification Number (VIN) shall not require any documentation.
The taxpayer sold the vehicle out-of-state prior to January 1 of the tax year. The best form of documentation is a copy of the bill of sale.
Non-resident affidavit from Armed Forces or wage earning statement as documentation.
A civilian spouse of military personnel is not exempt under the Soldiers' and Sailors' Civil Relief Act.
If an owner has moved to another state prior to the assessment date, the owner's motor vehicle shall not be taxed in
When a divorce occurs, property is awarded to one party or the other. In compliance with laws regarding ownership, the Cabinet will honor a divorce decree if signed by a judge prior to the assessment date of the tax year in question.
A debtor in bankruptcy must list all creditors on his/her petition for bankruptcy with the bankruptcy court to give the creditor time to file a proof of claim. Failure to list a creditor prohibits the debt to such creditor from being discharged through bankruptcy proceedings.
Public Service Companies pay taxes on their vehicles in the same manner as other taxpayers; that is, locally. These vehicles are also sitused locally. The situs, therefore, would be at the domicile of the branch or driver.
Per KRS 136.132, public service companies report motor vehicles and trailers that are owned, operated, or leased to the Revenue Cabinet each year on the Public Service Company Schedule for Owned and/or Leased Motor Vehicle Listing.
Intangible personal property has no intrinsic value - bonds, mortgages, notes, and accounts receivable.
All
Provide all identification information which is required at the top of the form. Failure to complete this part of the return properly, particularly with regard to Social Security number (or Federal ID number for corporations, partnerships, or fiduciaries), complete name and location, and type of return information could result in computer coding errors or misfiling. Omitted property notices of tax penalties and interest due could be generated as a result.
All property is valued as of January 1st of the year in which the return is filed. For valuation information or any assistance in billing out this return, contact the PVA office.