Property Tax Exemptions

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 all of the following:

  • Be non-profit
  • Have its funds used exclusively for education
  • 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.

Churches

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 Kentucky in November 1990, is as follows: Real property owned and occupied by, and personal property both tangible and intangible owned by institutions of religion.

Examples:

  • House of regularly scheduled Worship Services
  • Land & improvements used for Church camps
  • Buildings used for meetings and social events aimed primarily at church members
  • Outdoor recreational areas held for use by church members
  • Parking lots or garages essential for the congregations use to attend worship services, even if the lot or garage is rented out during the week

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. Property leased by a church is NOT exempt.

The key issue to determine if a church is occupying a parcel of land is the use of the property.

When an organization requests an exemption they need to request an application from the Property Valuation Office.

Other Exempt Properties

Purely Public Charities:

In order to be recognized as a purely public charity an institution must be ALL of the following:

  • Be non-profit
  • Be a public charity instead of a private charity

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:

  • American Red Cross or subsidized low income housing project
  • Non-profit hospitals
  • Boy and Girl Scout Organizations
  • Non-profit rehabilitation services for drug and alcohol abusers or mentally retarded
  • Leasehold Interest:
    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.
  • Non-profit Cemeteries:
    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. When an organization requests an exemption they need to request an application from the Property Valuation Office.