Property tax

Article Dean Dorton

The General Assembly did not forget property taxes when making its 2022 tax changes, but only one change has an impact on a significant number of taxpayers. In House Bill 6, the Legislature changed, as of January 1, 2022, the assessed value of used motor vehicles. The statutory change rolls back the 2022 assessed value to the 2021 value of the vehicle. As a result, motor vehicle owners who paid tax in January, February, or March of 2022, are entitled to refunds in an amount equal to the difference between the tax paid based on the January 1, 2022 assessed value and the tax due based on the January 1, 2021 value. If you recently received a check from the Kentucky State Treasurer in the range of $40-$50, it is highly likely that the check represents your refund of the tax. Property valuation administrators began using the 2021 values in April 2022, eliminating the need for additional refunds. The 2021 assessed values are to be used again in 2023.

There are two industry specific property tax changes made in House Bill 8. One change applies to “public service companies,” examples of which are gas and electric utilities. The other change is for manufacturers or retailers of prefabricated homes being held for sale. If you fit within either of these categories, contact your Dean Dorton or other tax adviser.

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Article Dean Dorton

Under the Kentucky Constitution, property owners who are 65 or older are eligible to receive the homestead exemption on their primary residence. The homestead exemption is $40,500 for both 2021 and 2022. The exemption amount is subtracted from the property’s assessed value, which reduces the owner’s property tax liability. For example, if the owner’s residence is assessed at a value of $250,000, 2021 property taxes would be computed on $209,500.

To qualify, each person claiming the exemption must file an application with the property valuation administrator (PVA) of the county in which the person resides. Applicants must own and maintain the property for which the exemption is sought as their personal residence as of January 1 of the application year. The application deadline is December 31.

Some PVAs have homestead application forms available on their websites. For example, the application for Jefferson County is available here, and the application for Fayette County is available here.

Only one exemption is allowed per household. Once applicants have been approved for the exemption, they are not required to reapply annually. However, if they move, they are required to reapply for the exemption for their new residence.

Certain utility companies also offer discounts for individuals who are 65 or older. If you believe you may be eligible, contact your utility company for further information.

Have questions? Email us at insights@deandorton.com

Article Dean Dorton

By: Erica Horn, CPA, JD | ehorn@deandorton.com

Businesses that pay property taxes on inventory in Kentucky are entitled to a credit against their 2019 Kentucky individual income, corporation income, or limited liability entity taxes (other than the $175 minimum LLET) equal to 50% of the property taxes paid on the inventory. This is double the percentage of property tax for the credit available in 2018 when the credit was first effective. The credit will continue to increase by 25 percentage points until the credit equals 100% of inventory property taxes paid in 2021.

“Inventory” is defined as “goods held for sale in the regular course of business.” The types of qualifying inventory range from retailers’ inventory to raw materials, in-process, and finished goods inventory of manufacturing companies. To qualify for the credit, property taxes due on inventory must be paid to the taxing jurisdiction on or before December 31 of the tax year.

The Department of Revenue has created an “inventory tax calculator” to assist in calculating of the credit:

Inventory tax credit calculator

The credit is nonrefundable and cannot be carried forward.