Kentucky Property Tax Update Archive

UPDATED march 2025

Derby Time is Appeal Time

For most people in Kentucky, early May means it’s time for the Kentucky Derby – but for property owners, May means that it’s time to review real property tax assessments for possible appeal.

Kentucky property is assessed as of January 1st of each year.  A property owner wishing to challenge an assessment must follow the requirements for conferences and appeals.  The first step in challenging an assessment is to request a conference with the county property valuation administrator (PVA).  Kentucky law mandates that all conferences must be held during (or before) a two-week period beginning the first Monday in May.  A taxpayer who fails to request a PVA conference within the statutory timeframe is barred from any further assessment appeals for that tax year.

PVAs are required to send taxpayers written notice of any assessment increase; however, notice is not required when the assessment did not increase.  Taxpayers may appeal their assessment, regardless of whether there was an increase – but it is up to the taxpayer to determine the applicable deadlines and to make the requisite request for a conference.

While assessment notices may go out any time before the statutory appeal period, most counties do not finalize their assessments until mid to late April.

If you have a Kentucky property that you think is overassessed, now is the time to start thinking about an appeal.  The appeal window is easy to miss, and it is open for a very short time.

Michele M. Whittington
Morgan Pottinger McGarvey
American Property Tax Counsel (APTC)

UPDATED september 2024

Proposed Regulations for Valuation of Low-Income Housing

Kentucky’s Department of Revenue has issued proposed regulations on valuation of multi-unit rental housing that is subject to government restriction on use.  Published on September 1st, proposed 103 KAR 5:200 implements the requirements of KRS 132.191(5), which was passed by the Kentucky General Assembly in 2023.  The regulation sets out the methodology that property valuation administrators must utilize when using the income approach to value low-income multifamily housing.

Two important points should be noted about the regulation.  First, Revenue is interpreting the statute to mean that use of the income approach is permissive, not mandatory.  This means that assessors may continue to value these properties by other methods, such as comparable sales.  Second, the regulation requires affected property owners to submit detailed information to the assessor by March 1st of each year, including income and expense information for the prior three years.  Failure to submit the required information could subject the property owner to a $100 fine.

Michele M. Whittington
Morgan Pottinger McGarvey
American Property Tax Counsel (APTC)

UPDATED september 2023

Kentucky's New Affordable Multifamily Housing Law

Kentucky has enacted legislation designed to provide more certainty to assessments of affordable multifamily housing, though questions remain about the implementation and application of the law.

KRS 131.191(5) states that the value of multi-unit rental housing that is subject to government restriction on use may be determined in two ways.  The first is an income approach using actual income and stabilized expenses.  The capitalization rate is to be determined annually by the Department of Revenue, subject to specified parameters.  Second, the value may be determined by adjusting the unrestricted market value of the housing, based on a ratio of restricted rents to unrestricted rents.  The statute specifically prohibits income tax credits from being included in any determination of the property's income.

The law places new obligations on the taxpayer.  The property owner is required to notify the county property valuation administrator of any government restrictions on use, or if the property is no longer subject to those restrictions.  More importantly, the property owner will be required to file with the property valuation administrator the information necessary to value the property under the methods described above, meaning that the owner will be required to submit income and expense information and rental rates to the county. Failure to comply with these notification and reporting requirements could subject the property owner to a penalty not to exceed $200.

The Department of Revenue is tasked with promulgating the necessary regulations and forms to implement the new program.  To date, neither the regulations nor the forms have been published.

Michele M. WhittingtonMorgan Pottinger McGarvey
American Property Tax Counsel (APTC)

UPDATED december 2022

KBTA Rejects Use of Vacant Comparables

The Kentucky Board of Tax Appeals (“KBTA”) appears to be moving Kentucky to a "value in use" state.  In three recent decisions, the KBTA held that “vacant store comparables are not truly comparable” to an occupied, operational retail store.  Lowe’s Home Centers v. Scott Co. PVA, KBTA File Nos. K19-S-017 & K20-S-031; Lowe’s Home Centers v. Montgomery County PVA, KBTA File No. K20-S-036; Lowe’s Home Centers v. Jefferson County PVA, KBTA File Nos. K20-S-168, -169, and -170.  The KBTA rejected the notion that vacant stores could be used as comparables, since the properties in question were occupied.  Even more disturbing was the KBTA’s ruling that, when valuing an owner-occupied property, it will assume that “it would have been sold as an occupied property, presumably with a lease to the then-possessor/occupier.”  K20-S-036 at p. 20.  Finally, the KBTA (an administrative tribunal) rejected a prior decision from the Kentucky Court of Appeals that leased comparables should not be used for owner-occupied properties, as the hearing officer “believe[d] that the Court of Appeals misconceived the effect of a lease on a property.”  K20-S-168 at p. 25.

The Montgomery County and Jefferson County cases have been appealed.

Michele M. Whittington
Morgan Pottinger McGarvey
American Property Tax Counsel (APTC)

UPDATED june 2022

Kentucky Targets Affordable Housing Values

With very little notice, and with no input from the affordable housing community, the Kentucky Department of Revenue rolled out a “Subsidized Housing Assessment Worksheet” for use by the county property valuation administrators in their 2022 assessments.  Affordable housing owners in several Kentucky counties were shocked to discover that their real property assessments had increased dramatically.  Some owners saw increases of four, five, and even six times the previous assessed value.

While the attempt to develop a standardized method for affordable housing valuation was understandable, the methodology was flawed in a number of respects.  The worksheet used HUD fair market rents without regard to the actual approved rent for the project; it used a flat percentage for expenses that is much lower than actual expenses for these projects; and it used a capitalization rate that was much lower than market rates.  Even more troubling was Revenue’s position that any tax credits associated with the property must be factored into the value of the real estate, despite numerous rulings from the Kentucky Board of Tax Appeals that tax credits are intangible property that cannot be included when valuing the real property.

The Department rescinded the worksheet without explanation, though it is likely that the decision was the result of pressure from affordable housing owners and advocates.  However, the Department maintains that it will review the worksheet/policy before reintroducing it.  Affordable housing owners should keep a close watch on their 2023 assessments.

Michele M. Whittington
Morgan Pottinger McGarvey
American Property Tax Counsel (APTC)

UPDATED september 2021

Is Kentucky a "Leased Fee" State?

In LWAGLVKY 1 LLC v. Jefferson County PVA, the Kentucky Board of Tax Appeals held that the assessor properly assessed the leased fee interest in several Walgreens stores, holding that that the leased fee interest "represents the fair cash value" for the properties.  The KBTA rejected Walgreens' contention that market rent for comparable properties was the proper measure of value.  Instead, the KBTA held that the contract rent under the leases "represent market rent for build to suit properties, thus the leased fee interest is the fee simple interest."  The KBTA correctly noted that the income approach is a valid method for assessment of income-producing properties, but ignored the distinction between the income attributable to the real property and the income attributable to the lease itself. 

Walgreens has appealed the decision to the Jefferson Circuit Court.

Michele M. Whittington

Morgan Pottinger McGarvey

American Property Tax Counsel (APTC)

UPDATED june 2021

Third Time is a Charm? Kentucky's State Tax Tribunal "Reorganized" Again

The structure of Kentucky’s state tax tribunal has been shuffled for the third time in five years.  Prior to 2016, all appeals from decisions of the Kentucky Department of Revenue, as well as real property tax appeals from county boards of assessment appeals, were heard by the Kentucky Board of Tax Appeals (KBTA).  Kentucky law allows the governor to appoint the KBTA members, but also requires that the terms of KBTA members were to be staggered.  This provided some continuity and stability for litigants, even when the governor’s mansion changed political hands. However, in August of 2016, then-Governor Bevin used an executive order to “reorganize” the KBTA into the Kentucky Claims Commission, removed all three of the KBTA members, and replaced them with his own appointments.  Subsequently, and utilizing the well-known doctrine of “what’s good for the goose is good for the gander,” Governor Andy Beshear “re-reorganized” the Kentucky Claims Commission back into the Kentucky Board of Tax Appeals, removed the three KCC members, and replaced them with his appointments (two of whom had previously served on the KBTA).

The Kentucky General Assembly decided to get in on the act and passed SB 162 in March of 2021.  While SB 162 ratified Governor Beshear’s return to the KBTA as the tax tribunal, the Legislature decided to change the requirements for KBTA members.  While prior law required that one member of the KBTA must be an attorney, SB 162 states that two of the three members, including the chairman, must be an attorney.  As a result, the person appointed by Governor Beshear as chair was forced to resign because she was not an attorney, and confusion reigns as to the new composition of the KBTA.  Until the effects of SB 162 are fully determined, it is unclear how and when state tax appeals will be heard.

Michele M. Whittington
Morgan Pottinger McGarvey
American Property Tax Counsel (APTC)

UPDATED march 2020

Kentucky Extends Property Tax Calendar

In light of the ongoing COVID-19 State of Emergency declared by Governor Beshear, and the effect of the State of Emergency on the operations of state and local government offices, the Kentucky Department of Revenue has taken a number of steps to extend the 2020 property tax calendar.

Personal property tax returns, originally due by May 15th, are now due by July 15th.

For real property, the tax roll inspection period (appeal period), originally scheduled to run from May 4 - 20, will now run from July 6 - 20.  Property valuation administrators are allowed to start their inspection periods before July 6th, but the inspection period cannot close before July 20th.  While the real property tax appeal period will be compressed, the counties plan to send out tax bills on the regular schedule (November and December).

Kentucky law does not provide any type of relief on property valuations for catastrophes or disasters.  Given the January 1st lien date, current policy is that a taxpayer will not be granted valuation relief for 2020 due to COVID-19, but that any diminution in value will be considered for 2021.  This policy is subject to change, although that is unlikely unless Kentucky's legislature provides some emergency relief.

Michele M. Whittington
Morgan Pottinger McGarvey
American Property Tax Counsel (APTC)

UPDATED september 2019

School Board's Ark Park Appeal Won't Float

A number of states allow school boards and other taxing jurisdictions to challenge an assessor's valuation of taxable properties.  The Kentucky Claims Commission recently affirmed that such challenges are not permitted under Kentucky law.  Grant County Board of Education v. Ark Encounter, LLC, Kentucky Claims Commission Final Order No. K-25927 (May 31, 2019), involved the Grant County PVA's assessment of the "Ark Park," which is a "life-sized" replica of Noah's Ark.  The Grant County Boarrd of Education challenged the PVA's assessment, arguing that the "Ark Park" had been undervalued by the PVA, thus depriving the school district of substantial tax revenue.  The Claims Commission held that the school board does not have standing to challenge a tax appeal.

The relevant Kentucky statute, KRS 133.120(10), says that tax appeals may be brought by "Any persons aggrieved by the decision of the [local] board, including the property valuation administrator, taxpayer, and department. . . ." The Claims Commission employed a narrow reading of the term "aggrieved" to find that the school district had not been deprived of any legal rights, and thus lacked standing to appeal.

The case is currently under appeal.

Michele M. Whittington
Morgan Pottinger McGarvey
American Property Tax Counsel (APTC)

UPDATED JUNE 2019

Deed Price Doesn't Necessarily Equal Value

As anyone who has purchased property in Kentucky knows, the consideration paid for the property and listed in the deed will almost certainly become the amount of the new property assessment.  The Kentucky Claims Commission recently affirmed that “consideration” and “fair cash value” are not interchangeable.  In Agree Hazard KY LLC v. Perry County PVA, Order No. K-25925 (May 22, 2019), the KCC adopted the portion of the hearing officer’s recommended order holding that, while the sale price for a property is “clearly evidence” of fair cash value, it is not necessarily determinative of valuation for property tax purposes.  If the property owner can present evidence showing that the deed price should be disregarded, the KCC will reject an assessment based on the deed consideration.

While the KCC adopted the hearing officer’s recommended order with respect to the deed price, it rejected the hearing officer’s finding that the property in question should be valued using market sales and rents, and instead found that the leased fee should be valued using the actual contract rent.

Michele M. Whittington
Morgan Pottinger McGarvey
American Property Tax Counsel (APTC)

UPDATED MARCH 2019

It's Almost That Time Again.....

Kentucky Assessment Notices to Be Mailed Soon

Most Kentucky counties will be mailing out their 2019 assessment notices in April.  Kentucky law requires that a taxpayer be notified in writing of any increase in its real property tax assessment.  Taxpayers wishing to challenge their tax assessments must do so during the statutory appeal period.  This year, the appeal period will generally run from May 6 - 20.  Taxpayers whose assessments do not increase may still challenge their assessments; however, they must also do so within the appeal period, and they generally will not receive written notice of the dates for appeal.

Appeal dates may differ from county to county, so taxpayers must check with the local assessing authority for the correct appeal dates.

Failure to request an assessment conference with the county property valuation administrator during this period will generally preclude the taxpayer from any further challenge to the assessment or the tax bill for that year.

Michele M. Whittington
Morgan Pottinger McGarvey
American Property Tax Counsel (APTC)

UPDATED june 2018

Kentucky Constitutional Exemptions Are Limited to Property Taxes

Kentucky has, in recent years, seen an increasing number of disputes regarding the application of constitutional tax exemptions.   In Commonwealth v. Interstate Gas Supply, 2016-SC-000281-DG, 2018 WL 1419444 (Mar. 22, 2018), the Kentucky Supreme Court clarified that the tax exemption accorded to a “purely public charity” by Section 170 of the Kentucky Constitution is limited to an exemption from property taxes, and not from other kinds of taxes.  In so doing, the Court overruled two prior decisions that had ostensibly extended the Section 170 exemption to non-property taxes.

The tax at issue in the Interstate Gas Supply case was the Kentucky use tax that was imposed on natural gas purchases by a charitable hospital.  The hospital relied on a 1918 decision, Corbin Young Men’s Ass’n v. Commonwealth, 205 S.W. 388, which held that Section 170 exempted “institutions of public charity” from all taxes, not just property taxes.  While several other decisions had questioned the validity of the 1918 ruling, the Court expressly rejected the earlier opinion and found that Section 170’s exemption is limited to property taxes.

The Court also overruled a 1966 case finding that Kentucky’s use tax was more akin to a property tax than to an excise tax.  Thomas v. City of Elizabethtown, 403 S.W.2d 269 (Ky. 1966).  The Interstate Gas Supply court noted that a number of other cases, both in Kentucky and in other jurisdictions, had found that use taxes are properly classified as excise taxes, not property taxes.  Accordingly, the Court found that the natural gas purchases were subject to use tax, and were not exempt under Section 170.

Michele M. Whittington
Morgan and Pottinger
American Property Tax Counsel (APTC)

UPDATED March 2018

Changes to Kentucky Personal Property Tax Return

The Kentucky Department of Revenue (KYDOR) has made some significant changes to its personal property tax return.  The "floor" value for property in all classes has been decreased from 20% to 10%. Kentucky taxes personal property that is still in use, regardless of the age of the property.  For many years, property was taxed at a minimum of 20% of its original cost, without regard for the actual market value of that property.  KYDOR has cut the "floor" value to 10%, and has also revised its economic life tables.  These changes will benefit taxpayers with older property.

KYDOR has also revised its conversion factors to incorporate straight-line depreciation.  The old factors used the economic lives of the property plus standard inflation indices.  The new methodology eliminates the inflation indices and relies solely on economic useful life.  At first glance, it appears that this change may increase the taxable value of the property. The factors to be applied to newer property are lower than the factors on previous returns, meaning that the property will have a higher taxable value.

The effect of these changes will vary according to the age and type of property that the taxpayer is reporting, but it appears that any benefit received from the "floor" change may be offset by the factor change.

Michele M. Whittington
Morgan & Pottinger
American Property Tax Counsel (APTC)

UPDATED March 2017

Kentucky Assessment Notices to Be Mailed Soon

Most Kentucky counties will be mailing out their 2017 assessment notices in April.  Kentucky law requires that a taxpayer be notified in writing of any increase in its real property tax assessment.  Taxpayers wishing to challenge their tax assessments must do so during the statutory appeal period.  This year, the appeal period will generally run from May 1 - 15.  Taxpayers whose assessments do not increase may still challenge their assessments; however, they must also do so within the appeal period, and they generally will not receive written notice of the dates for appeal.

Appeal dates may differ from county to county, so taxpayers must check with the local assessing authority for the correct appeal dates.

Failure to request an assessment conference with the county property valuation administrator during this period will generally preclude the taxpayer from any further challenge to the assessment or the tax bill for that year.

Lexington/Fayette County taxpayers whose property has been subject to an agricultural exemption in the past should check their property's status, since a number of the exemptions have been revoked under a recent policy change.  

Michele M. Whittington
Stites & Harbison PLLC
American Property Tax Counsel (APTC)

Updated December 2016

Kentucky Court of Appeals Upholds Leased Fee Valuations

The Kentucky Court of Appeals upheld the use of leased fee valuations for Kentucky properties in Wilgreens, LLC and Walgreen Co. v. Fayette County Property Valuation Administrator, No. 2015-CA-000407-MR (Sept. 2, 2016).  The case addressed the question of whether income-producing properties should be valued using the above-market rental income from the property.  As it has in many other jurisdictions, Walgreens asserted that the use of the above-market rent payments as the basis for the assessment resulted in a valuation of both the real property rights and the intangible rights associated with the above-market lease.  Accordingly, Walgreens maintained that the property valuation administrator exceeded his authority, which is limited to the assessment of the real property rights.

While the question was not before the court, the Court of Appeals nevertheless reviewed the evidence presented at trial and found that Walgreens had failed to present “convincing evidence” that the PVA had overvalued the property.  In addition, the court found that, as a matter of Kentucky law, the PVA had properly considered the actual income from the property in making the assessment.  While the court did not specifically address the “leased fee” vs. “fee simple” issue, the result of its ruling is that Kentucky is valuing the leased fee interest in properties.

Walgreens has filed a motion for discretionary review with the Kentucky Supreme Court.

Michele M. Whittington
Stites & Harbison, PLLC
American Property Tax Counsel (APTC)

 

Updated June 2016

Undervalued Real Property May Not Be Retroactively Assessed As "Omitted Property"

In Union Underwear Company dba Fruit of the Loom v. Russell County Property Valuation Administrator, KBTA File No. K15-S-01 (Apr. 11, 2016), the Kentucky Board of Tax Appeals affirmed the principle that a property valuation administrator may not retroactively assessed undervalued property as omitted property. The Fruit of the Loom plant had been financed with industrial revenue bonds. Kentucky law provides very favorable property tax treatment of IRB-financed property, whereby only the value of the leasehold estate is taxed, and it is taxed at a very favorable “state-only” rate of $0.015 per $100 of assessed value. However, the favorable tax treatment ends when the financing bonds are paid off.The bonds used to finance the Fruit of the Loom plant were issued in 1983. Beginning in 1990, the PVA assessed the leasehold interest at a value of $4 million. The leasehold interest value was eventually increased to $10 million, where it remained until 2014. The bonds were paid off in 2000, but the PVA never put the property on the tax roll at its full value. After the plant closed in 2014, the PVA notified the company that he was issuing “omitted” or “additional” tax bills on the plant at a value of $24,873,800 and at full state and local tax rates.KRS 132.290 allows property that has not been “listed for taxation” to be deemed “omitted property” that can be assessed for the previous five years. However, property that has been listed for assessment but has been undervalued is not deemed to be “omitted” property. Undervaluations cannot be corrected. Accordingly, although the KBTA found that the Fruit of the Loom plant should have been assessed at full value and full tax rates beginning in 2000, it held that the PVA lacked the authority to issue omitted assessments for any year. In essence, real property that has been listed for assessment cannot be reassessed once the current tax year has passed.This case serves as a reminder that, while tangible property is subject to revaluation and reassessment for five years after the original assessment, the same rule does not apply to real property. If a PVA undervalues listed real property, the taxing authority is bound by that undervaluation for that tax year. 

Michele M. Whittington
Stites & Harbison, PLLC
American Property Tax Counsel (APTC)

 

Updated December 2015

Software and Capitalized Labor Costs – Confusion Reigns in Kentucky

Kentucky policy on the taxability of computer software for tangible property tax purposes remains a source of controversy. In the absence of any statutory guidance on the subject, the Kentucky Department of Revenue (“Department”) has taken conflicting positions that have led to confusion for taxpayers. The Department has consistently deemed “prewritten” software to be taxable as personal property; however, beginning in 2014, Department policy appeared to be that “custom” software was not taxable.

The taxability of customization costs associated with software have generated even more controversy. These customization costs relate to changes in the software that are specific to the individual user, and are often necessary in order to make the software work within the confines of the user’s overall system. Customization costs include consulting fees and expenses, as well as internal labor costs associated with the project. Accounting rules and principles require that these customization costs be capitalized and listed on the company’s fixed asset listing. In many cases, these costs may greatly exceed the cost of the software itself.

The Department’s original position was that, because the capitalized labor costs appeared on a company’s fixed asset listing, they were taxable personal property. This policy was reversed, at least on an informal basis, beginning in 2013, and companies successfully had the capitalized labor costs associated with software implementation removed from their assessments. In late 2015, the Department again reversed itself by issuing a policy statement, under which direct costs associated with software customization are deemed to be taxable. Adding to the confusion is the fact that the policy states that “direct costs for custom software are taxable,” although the policy is being interpreted to tax customization costs associated with prewritten software.

The Department’s ever-shifting policy on the taxability of these costs has resulted in very significant omitted tax assessments for Kentucky companies. In addition, the question of whether these costs must now be listed as tangible property will cause problems for companies filing their 2016 tangible property tax returns, if the issue is not resolved prior to the filing date.

Michele M. Whittington
Stites & Harbison, PLLC
American Property Tax Counsel (APTC)

 

Updated September 2015

State Valuation Methodology for Woodland Properties Upheld

Kentucky has seen a growing number of cases involving the valuation of agricultural property. The Kentucky Department of Revenue has developed a mass appraisal methodology for these valuations. The Department’s methodology divides agricultural property, including woodlands, into eight different classes that reflect the different types of farm property and different soil classes found throughout the state. Once classified, the property is valued using estimated cash rents for the land, divided by a capitalization rate, in order to obtain the property’s “indicated use value” or agricultural value. The taxpayer in Jean Claire Corum v. Harlan County PVA, Order No. K-24840, 2015 Ky. LEXIS 109 (May 19, 2015), challenged the Department’s methodology for valuing woodland property, arguing that it grossly overvalued the income-producing capability of the property. The Kentucky Board of Tax Appeals rejected the taxpayer’s argument that the Department should change its mass appraisal methodology and should instead rely on a study conducted by the University of Kentucky Department of Forestry. The Board held that the UK methodology failed to use current timber prices; and that it utilized a 70-year growing cycle for the trees that failed to take into account the fact that harvestings had occurred or could occur on the property outside the 70-year growing cycle. Further, while the assessor was entitled to rely on a mass appraisal methodology to value the property, the property owner was required to provide evidence that the methodology used by the assessor overstated the value of the owner’s specific property.

Michele M. Whittington
Stites & Harbison PLLC
American Property Tax Counsel (APTC)

 

Updated March 2015

Is That Property Tax Exempt?

Two recent rulings by the Kentucky Board of Tax Appeals (“KBTA”) dealt with the question of whether properties owned by charitable organizations were tax-exempt as properties of a “purely public charity” pursuant to Section 170 of the Kentucky Constitution. In Pleasure Valley Lions Club, Inc. v. Jefferson County PVA, KBTA Order No. K-24701 (October 9, 2014), the property in question was a multipurpose building owned by the Pleasure Valley Lions Club. The organization qualified as an IRS 501(c)(4) entity, and its noted purpose was “to serve the local community and fundraising to promote the welfare of many.” The building in question was used for the organization’s meetings; for member and non-member functions; and for the group’s main fundraiser, which was open to the public. In addition, free use of the building was given to nearby seniors for walking, exercise, bingo, and monthly lunches. While the organization made charitable donations from the funds raised, the Board found that the vast majority of the funds raised were used for maintenance of the building itself. The Board found that “any charity dispensed at the building itself is merely incidental to the primary use of the building as a gathering place for the club members and their families,” and that the dispensing of charitable funds was merely an incidental part of the club’s activities. Accordingly, the Board found that the club’s activities were inconsistent with a “purely public charity,” since its activities were not “wholly altruistic in the end to be attained.”

The Board reached the opposite result in Grand Lodge F & A.M. v. Kenton County PVA, KBTA Order No. K-24714 (November 19, 2014). The Grand Lodge sponsors several communities for the elderly, including the Springhill Retirement Community. Grand Lodge leased a tract of land to the Masonic Retirement Village, a non-profit organization, which built 48 residential units on the property. The residents paid an entrance fee for the units, plus monthly maintenance fees, but 82% of the entrance fee was returned to the resident upon termination. The residents did not obtain title to the units, and their interests were not assignable or transferrable. The taxing jurisdictions asserted that the residents’ interests in the units were taxable, and effectively challenged the Masonic Retirement Village’s charitable status.

The KBTA first found that the provision of housing to the elderly is a charitable activity. The entrance fee paid was substantial, but was below the cost of constructing the units, and the majority of the fee was returned to the resident upon termination. Further, the owner incurred annual operating losses on the property, and those losses were covered by a related charity. According, the Board found that the Masonic Retirement Village was using the property for a charitable purpose. Turning to the second question, the Board found that the residents did not obtain a taxable interest in the units sufficient to trigger taxation pursuant to KRS 132.195. The residents obtained nothing more than bare possession of the property, with no right to sell, sublet, transfer, or encumber the property. This bare possession did not meet the definition of a taxable “interest in the property,” which must be at least a beneficial or equitable interest. Accordingly, the units were held to be tax-exempt.

Michele M. Whittington
Stites & Harbison PLLC
American Property Tax Counsel (APTC)

 

Updated December 2014

Kentucky Telecommunications Tax Ruled Unconstitutional

In a surprisingly broad ruling, the Kentucky Court of Appeals invalidated the Multichannel Video Programming and Communications Services Tax (“Telecommunications Tax”), ruling that the entire statutory scheme violates the Kentucky Constitution. The Telecommunications Tax, enacted in 2005, effectively imposes a 5.4% tax on total charges for multichannel video programming services and a 4.3% tax on total charges for telecommunications services. These taxes are paid to the Finance and Administration Cabinet, and the revenue becomes part of the state general fund. The 2005 act also prohibited local governments from imposing franchise fees or taxes on telecommunications companies and cable providers. The effect of the act was to shift tax revenue from local governments to the state government.

A number of cities challenged the Telecommunications Tax, arguing that the prohibition on local taxation of these services violated Sections 163 and 164 of the Kentucky Constitution. The Court of Appeals agreed with the cities, finding that Sections 163 and 164 give local governments the right to grant utility franchises and to collect franchise fees. However, rather than simply invalidating the provision of the law that prohibited the imposition of local franchise fees, the Court of Appeals invalidated the entire Telecommunications Tax statutory scheme.

Petitions for rehearing have been filed with the Court of Appeals. The petitioner have asked that, at minimum, the Court of Appeals amend its ruling to only invalidate the portion of the law that relates to local taxation. It is likely that the Kentucky Supreme Court will be asked to review the ruling, regardless of the Court of Appeals’ decision on rehearing.

Michele M. Whittington
Stites & Harbison PLLC
American Property Tax Counsel (APTC)

 

Updated September 2014

Kentucky Tax Board Expands Machinery Exemption

A recent decision by the Kentucky Board of Tax Appeals expanded a tax exemption for machinery held by a retailer under a floor plan financing statement.  KRS 132.200(16) exempts from local taxation “new farm machinery and other equipment held in the retailer’s inventory for sale under a floor plan financing arrangement by a retailer. . . .”  The Department of Revenue had long interpreted this statute to provide favorable tax treatment solely to farm machinery and farm equipment that was subject to floor plan financing.  In Wilson Equipment Company v. Finance and Administration Cabinet, Department of Revenue, Order No. K-24653, 2014 Ky. Tax LEXIS 160 (May 22, 2014), a retailer of non-farm machinery and equipment argued that the plain language of the statute exempted all “other equipment” that was floor plan financed, and not just farm equipment.  The KBTA rejected the Department of Revenue’s interpretation, holding that the statute was not ambiguous, and the use of the word “other” by the legislature evidenced an intent for the “other equipment” category to be “in addition to or different from that already named [farm machinery].”

While the ruling is fairly narrow, it provides a substantial tax savings for equipment and machinery retailers, as long as their inventory is held under a floor plan financing arrangement.

Michele M. Whittington
Stites & Harbison PLLC
American Property Tax Counsel (APTC)

 

Updated March 2014

Kentucky Assessment Notices to Be Mailed Soon

Most Kentucky counties will be mailing out their 2014 assessment notices in April. Kentucky law requires that a taxpayer be notified in writing of any increase in its real property tax assessment. Taxpayers wishing to challenge their tax assessments must do so during the statutory appeal period, generally the first two weeks of May. Taxpayers whose assessments do not increase may still challenge their assessments; however, they must also do so within the appeal period, and they generally will not receive written notice of the dates for appeal.

Appeal dates may differ from county to county, so taxpayers must check with the local assessing authority for the correct appeal dates.

Failure to request an assessment conference with the county property valuation administrator during this period will generally preclude the taxpayer from any further challenge to the assessment or the tax bill for that year.

Michele M. Whittington
Stites & Harbison PLLC
American Property Tax Counsel (APTC)

 

Updated September 2013

Kentucky Courts Continue to Clarify Law on Tax Liens

Disputes relating to property tax liens, and the priority of those liens in relation to other secured obligations in a foreclosure action, continue to receive a great deal of attention from Kentucky's courts. In the latest case, Klas Properties, LLC v. Tax Ease Lien Investments 1, LLC, No. 2011-CA-002319-MR, 2013 Ky. App. LEXIS 119 (Ky. Ct. App. May 31, 2013), the Kentucky Court of Appeals ruled that a lienholder that brings suit to enforce its lien is not entitled to its court costs "off the top" when there are insufficient funds to cover all of the outstanding liens.

This case involved multiple holders of tax liens for a single property. Tax Ease purchased the certificates for three years, Klas purchased the certificate for one year, and the county retained liens for two years. Tax Ease filed a foreclosure action and named the other lienholders as parties. After a default judgment was entered, the property was sold for an amount that did not cover the total lien debt. Tax Ease argued that it should be allowed to recover the costs associated with bringing suit prior to the pro rata distribution of the remaining proceeds. Klas argued that, under the plain language of the applicable statutes, KRS 134.420 and 134.452, the litigation costs should be added to the unpaid taxes due, and then the amount should be divided on a pro rata basis. After reviewing the applicable statutes, the Court of Appeals agreed that the litigation costs were not entitled to "super priority" and accordingly, that any litigation costs must be added to the tax debt before the proceeds are divided on a pro rata basis.

The Court of Appeals expressed concern that giving a lienholder "super priority" with respect to its costs might lead to a "race to the courthouse steps;" however, the contrary seems to be true. If the litigation costs are added to the total tax liability and then subjected to a proportional distribution, the lienholder who files suit will not be fully compensated for its costs, while other lienholders will be able to obtain the benefit of the first lienholder's action without bearing the costs of that litigation.

Michele M. Whittington
Stites & Harbison PLLC

 

Updated June 2013

Kentucky Supreme Court Ruling Creates New Refund Opportunities

In a blow to the Kentucky Department of Revenue and local taxing jurisdictions, the Kentucky Supreme Court has made it easier for some taxpayers to obtain refunds of previously-paid tangible personal property taxes. The Court's opinion in Department of Revenue v. Cox Interior, 2010-SC-00794-DG (June 20, 2013), held that taxpayers may seek refunds of tangible personal property taxes that were paid pursuant to a Department of Revenue assessment, even if the taxpayer did not follow the statutory procedures for protesting such an assessment.

KRS 134.590 provides that a taxpayer may seek a refund of ad valorem taxes paid "when no taxes were due," if the taxpayer applies for a refund within two years of the date when the taxes were paid. The statute further requires that a taxpayer is prohibited from obtaining a refund unless the taxpayer "has properly followed the administrative remedy procedures" established under various statutes. In the case of a tangible property tax audit and assessment, this provision has long been understood to require that a taxpayer must have protested the assessment within the statutorily-mandated forty-five day period. Absent such a protest, the Department of Revenue has refused to process a taxpayer's refund claim. Thus, a taxpayer who paid the Department's assessment without protest was prohibited from later filing a claim for a refund of the taxes paid. This interpretation essentially rendered the two-year refund provision meaningless for property taxes.

The Supreme Court distinguished between taxpayers who are challenging the valuation of their property and taxpayers who are challenging the classification of property. After reviewing all of the applicable statutes relating to assessment appeals and protests, the Court held that taxpayers who wish the challenge the valuation of the property being taxed can only do so through an assessment protest filed with the county assessor (in the case of real property) or the Department of Revenue (in the case of personal property). However, a taxpayer who raises issues regarding the classification of property may utilize the refund procedure found in KRS 134.590 – and the taxpayer has two years to file a refund claim. In the Cox Interior case, the taxpayer's refund claim was based on an allegation that Revenue had improperly classified its manufacturing machinery as non-manufacturing machinery. Accordingly, the Court found that Cox Interior was entitled to utilize the two-year refund statute.

The Supreme Court's decision is likely to lead to even more litigation, as the distinction between a "valuation" challenge and a "classification" challenge is not entirely clear. Further, the Cox Interior decision has no effect on real property tax appeals, which are still subject to the protest provisions and the attendant time limits. For taxpayers who wish to challenge a personal property tax assessment, the best course of action is to file a protest within forty-five days of the date of the assessment. However, the Cox Interior decision opens the door for some taxpayers to obtain relief that was not previously available.

 

Updated December 2012

Governor's Tax Reform Commission Issues Recommendations

Kentucky Governor Steve Beshear's Blue Ribbon Commission on Tax Reform has issued its report and recommendations for changes to Kentucky's tax code. The Commission, which was formed in February of 2012, was assigned the task of developing a set of changes to Kentucky's tax laws that would "make the state's tax code more responsive to changes in the economy, as well as to make taxes more equitable for Kentuckians." The Commission was comprised of twenty-three members from the public and private sectors, along with non-voting members of the Kentucky General Assembly. Consultants and representatives from the Kentucky Society of Certified Public Accountants and the Kentucky Bar Association also advised the group.

The 450-page report, issued by the Commission on December 17th, contains fifty-four separate recommendations for changes to the Kentucky tax code. If all of the changes were implemented, they would generate approximately $659 million in additional revenue for the state. The vast majority of the changes deal with individual and corporate income taxes and sales and excise taxes. Property taxes make up a relatively small portion of the Commission's recommendations, and many of the changes would actually benefit Kentucky taxpayers. Those changes include:

• Creation of an income tax credit for distillers to offset the property tax on stored barrels of bourbon;
• Exemption of inventory from state property tax;
• Freezing the state property tax rate at $0.12 per $100 of assessed value;
• Clarification of the definition of "public service companies" for tax purposes; and
• Elimination of negligible state property tax rates for specified categories of tangible personal property.

It remains to be seen whether any of the proposed changes will be adopted by the General Assembly. Legislative leaders have already expressed objections to many of the corporate tax reforms and to the tax increases, and other groups have objected to recommendations that would affect individuals, such as the cap on itemized deductions and the limit on tax breaks for pensions.
The Commission's full report may be accessed at http://ltgovernor.ky.gov/taxreform/Documents/Report/TaxReformCommissionReportFinal.pdf.

 

Updated September 2012

Kentucky Supreme Court Rejects Expansion of Charitable Exemption

The Kentucky Supreme Court has refused to expand the tax exemption for property owned by "institutions of purely public charity" to include economic development. In Hancock v. Prestonsburg Industrial Corporation, 365 S.W.3d 199 (Ky. 2012), the Supreme Court reversed the Court of Appeals' decision, which had found that a non-profit economic development group's property was exempt from ad valorem taxation, under Section 170 of the Kentucky Constitution. The stated purpose of the Prestonsburg Industrial Corporation ("PIC") was to "assist in the development of the City of Prestonsburg as a means to attract business and industry into the area." To that end, PIC purchased a 100 acre tract of land, which it intended to develop and improve, and then sell the property to businesses. The proceeds from the sale were to be reinvested for additional property purchases and improvements. PIC argued that this economic development would bring new businesses into the community, resulting in creation of new jobs, and that its activities made it a "purely public charity."

The Supreme Court refused to expand Section 170's exemption to include economic development as a charitable activity. The court noted that PIC's actual activity involved the development and marketing of commercial property, and that there was no evidence that PIC's buyers would be restricted to charities or organizations needing public assistance. The court further noted that PIC's activities would not actually create jobs, but rather, any job creation would only be an incidental benefit to the sale of the property. Accordingly, the court found that, while "charity" is "broader than activities that merely fulfill basic human needs," PIC's activities were not "wholly altruistic in the end to be attained. . .[so] that no private or selfish interest should be fostered under the guise of charity. Simply stated, commercial and economic development are the promotion of business interests and not, therefore, indicative of actions of a purely public charity."

Tax exemptions in Kentucky are strictly construed against the taxpayer. While the court signaled that it might consider some non-traditional charitable activities to be tax-exempt, it was not willing to expand the definition to include economic development activities by a private party.

 

Updated December 2011

Kentucky Court Affirms Priority of Third-Party Tax Liens

Tax liens held by third-party purchasers continue to generate a great deal of litigation in Kentucky. In the most recent case, U.S. Bank v. Tax Ease Lien Investments 1, No. 2011-CA-00472-MR (Nov. 18, 2011), the Kentucky Court of Appeals addressed the question of whether tax liens held by third parties are given equal priority to those held by a county or municipality. A property owner failed to pay the ad valorem taxes on a parcel for a number of years. Some of the tax liens were purchased by a third-party tax lien company, one lien was held by a bank, and the remaining liens were retained by the city and county. The property was ordered to be sold, but the proceeds were insufficient to satisfy all of the outstanding liens.

The Master Commissioner paid off the liens held by the city and county in full, and the third parties received a pro rata share of the proceeds. The Court of Appeals reversed the trial court's ruling that upheld the Master Commissioner's distribution plan, noting that under Kentucky law, liens held by third-party purchasers are entitled to priority, regardless of whether they are held by the originating governmental authority or by a third-party purchaser. Accordingly, the proceeds should have been subject to a pro rata distribution among all of the lien holders.

The law in Kentucky relating to tax liens continues to evolve, as the General Assembly responds to issues raised by the purchase of these liens by third parties. It is likely that additional attempts will be made to refine the tax lien laws in the upcoming session of the General Assembly.

 

Updated March 2011

Kentucky Assessment Notices to Be Mailed Soon

Most Kentucky counties will be mailing out their 2011 assessment notices in April.  Kentucky law requires that a taxpayer be notified in writing of any increase in its real property tax assessment.  Taxpayers wishing to challenge their tax assessments must do so during the statutory appeal period, generally the first two weeks of May.  Taxpayers whose assessments do not increase may still challenge their assessments; however, they must also do so within the appeal period, and they generally will not receive written notice of the dates for appeal.

Appeal dates may differ from county to county, so taxpayers must check with the local assessing authority for the correct appeal dates.

Given the slow economic recovery, there may be a significant opportunity for a reduction in a property tax assessment – but only if the taxpayer acts within the appeal dates.  Failure to request an assessment conference with the county property valuation administrator during this period will generally preclude the taxpayer from any further challenge to the assessment or the tax bill for that year.

 

Updated December 2010

Court of Appeals Expands Appeal Rights on Personal Property Tax Assessments

A recent ruling by the Kentucky Court of Appeals clarified and expanded a taxpayer's right to appeal from an assessment made against its tangible personal property by the Department of Revenue. In Department of Revenue v. Cox Interiors, No. 2009-CA-001691-MR (Nov. 5, 2010), the Kentucky Court of Appeals held that a taxpayer is entitled to receive a refund of its payment of tangible personal property taxes, so long as the request for refund is filed within two years (as required by statute), even if the taxpayer did not protest the assessment prior to payment.

Prior to the Cox decision, the statute governing refunds (KRS 134.590) of personal property tax payments had been construed to preclude a refund unless the taxpayer had first filed a protest within forty-five days of the assessment, as required by KRS 131.110. The taxpayer argued that the Department's reading of the statute was incorrect, since it had the effect of limiting a personal property taxpayer to a forty-five day period for claiming a refund. The Court of Appeals agreed with the taxpayer, finding that the statute could not be construed to cut off a taxpayer's two-year right to claim a refund, and that a protest of a refund denial would fulfill the exhaustion of administrative remedies requirement found in KRS 131.110.

The case has been appealed to the Kentucky Supreme Court by the Department of Revenue.

 

Updated September 2010

Court Expands Definition of "Charitable Purpose" to Include Economic Development

In a recent decision, the Kentucky Court of Appeals expanded the commonly-held idea of a "charitable purpose" to include economic development. The question in Hancock v. Kentucky Board of Tax Appeals, No. 2009-CA-001144-MR (May 7, 2010), was whether a private corporation's property was exempt from ad valorem taxation under Section 170 of the Kentucky Constitution. The private corporation was formed as a nonprofit entity to "assist in the development of the City of Prestonsburg as a means to attract business and industry into the area." The corporation purchased a 100-acre tract of land from the City of Prestonsburg, which was promptly placed on the tax rolls by the county assessor. The Court of Appeals rejected the findings of both the Kentucky Department of Revenue and the Kentucky Board of Tax Appeals that the corporation was not entitled to tax-exempt status. The court found that the corporation's property was not "public property" under Section 170; however, it found that the corporation was a charitable organization and thus, that its property was exempt from taxation. While the court noted that the corporation did not serve a "basic human need" such as providing food, clothing and shelter, it held that, "in contemporary society, economic development in a fundamental need" and that creation of jobs "serves a societal need." Accordingly, the court held that the property was owned by a charitable organization and was tax-exempt.

 

Updated March 2010

Assessment Notices to Be Mailed Soon

Most Kentucky counties will be mailing out their 2010 assessment notices in April. Kentucky law requires that a taxpayer be notified in writing of any increase in its real property tax assessment. Taxpayers wishing to challenge their tax assessments must do so during the statutory appeal period, generally the first two weeks of May. Taxpayers whose assessments do not increase may still challenge their assessments; however, they must also do so within the appeal period, and they generally will not receive written notice of the dates for appeal.

Appeal dates may differ from county to county, so taxpayers must check with the local assessing authority for the correct appeal dates.

Given the continued economic downtown, there may be a significant opportunity for a reduction in a property tax assessment – but only if the taxpayer acts within the appeal dates. Failure to request an assessment conference with the county property valuation administrator during this period will generally preclude the taxpayer from any further challenge to the assessment or the tax bill for that year.

 

Updated December 2009

Court Grants Second Bite at the Tangible Property Apple

A recent circuit court decision has reversed a Department of Revenue policy denying tangible property taxpayers the ability to challenge an audit after the assessment had been paid. In Department of Revenue v. Cox Interior, Inc., (Aug. 27, 2009), the taxpayer paid an assessment, and later filed for a partial refund. Revenue denied the claim because Cox had failed to file a protest within forty-five days of the date of the assessment.

The Franklin Circuit Court held that a taxpayer's failure to file a protest did not preclude the taxpayer from later seeking a refund of the tax paid. The Court stated that the Department's policy "would effectively require the exhaustion of two administrative remedies instead of one" and "simply erects unnecessary procedural obstacles to obtaining a refund." The Department has appealed the ruling to the Kentucky Court of Appeals.

 

Updated September 2009

Taxpayers Face New Challenges in Appeals of Assessments

In many states, local taxing jurisdictions are a normal part of, and party to, the assessment and appeal process. In Kentucky, however, valuations and resulting assessments made by the county property valuation administrators are usually accepted without question by other taxing jurisdictions, such as school boards and municipalities. However, recent economic problems have forced taxing jurisdictions to search for additional funding in non-traditional areas. For the first time in recent memory, these jurisdictions are taking part in the assessment review process. School boards are putting pressure on PVAs to maintain assessed values, even when presented with taxpayer evidence that the property is overassessed. In some instances, local jurisdictions are challenging the PVA's assessments.

Taxpayers challenging their assessments should be aware of the competing pressures that are being brought to bear on the property valuation administrators and the effect that these pressures can have on the PVA's willingness to reach an informal settlement. Taxpayers should also be aware that the strict requirements for challenging assessments apply equally to both taxpayers and to the taxing jurisdictions, and should be prepared to argue for dismissal of a jurisdiction's appeal if it fails to adhere to the deadlines found in the applicable Kentucky statutes.

 

Updated March 2009

Assessment Notices to Be Mailed Soon

Most Kentucky counties will be mailing out their 2009 assessment notices in April. Kentucky law requires that a taxpayer be notified in writing of any increase in its real property tax assessment. Taxpayers wishing to challenge their tax assessments must do so during the statutory appeal period, generally the first two weeks of May. Taxpayers whose assessments do not increase may still challenge their assessments; however, they must also do so within the appeal period, and they generally will not receive written notice of the dates for appeal.

Appeal dates may differ from county to county, so taxpayers must check with the local assessing authority for the correct appeal dates.

Given the recent economic downtown, there may be a significant opportunity for a reduction in a property tax assessment – but only if the taxpayer acts within the appeal dates. Failure to request an assessment conference with the county property valuation administrator during this period will generally preclude the taxpayer from any further challenge to the assessment or the tax bill for that year.

 

Updated December 2008

Downtown Louisville Property Assessments Subject to Dramatic Increases

Property owners in Louisville's downtown Central Business District ("CBD") have noticed dramatic increases in their property tax assessments for 2008. The increases are largely the result of a land study that was performed by the Jefferson County PVA's office. The PVA utilized a number of "land only" sales in the downtown area (some over 20 years old) and then applied an upward annual adjustment to the sales prices. Projected land values for all of the CBD were then determined through the use of regression analysis. As a result, some property owners saw increases in the "land" portion of their assessments of over one hundred percent. Owners of surface parking lots and other vacant land were particularly hard hit by the increases, since the PVA assumed that these properties were all available for redevelopment in connection with a new downtown sports arena project.

A number of downtown property owners have already appealed these increases. Property owners who did not already appeal are precluded from doing so for the 2008 tax year; however, they may still challenge the increases by appealing their assessments for 2009.

 

Updated September 2008

Court Of Appeals Clarifies Law On Timing Of Property Tax Appeals

The Kentucky Court of Appeals recently clarified the law regarding the timing of real property tax appeals, holding that a taxpayer wishing to challenge an assessment must do so within the statutory appeal period for the tax year in question. The taxpayer in Jefferson County Property Valuation Administrator v. Cromwell Louisville Associates, No. 2007-CA-001128-MR (Ky. Ct. App., Aug. 8, 2008) had received an increase in the assessment on its parking garage property for tax year 2001, but failed to appeal that increase during the 2001 assessment conference period. The taxpayer subsequently attempted to challenge both the 2001 and 2002 assessments during the 2002 conference period. The Court of Appeals reversed the ruling of the Jefferson Circuit Court, which had held in favor of the taxpayer. The court reviewed the relevant statutes and found that KRS 133.120 and 133.045, when read together, did not authorize a taxpayer to challenge any assessment beyond that set for the current year.

This decision does not represent a marked change from existing law, since it has long been understood that real property tax appeals are limited to the tax year in question. The decision does, however, underscore the importance of observing the deadlines established by KRS 133.120, since a failure to follow those administrative appeal requirements in a timely fashion will prohibit a taxpayer from challenging its assessment for that particular year.

 

Updated March 2008

Assessment Notices to Be Mailed Soon

Most Kentucky counties will be mailing out their 2008 assessment notices in April. Kentucky law requires that a taxpayer be notified in writing of any increase in its real property tax assessment. Taxpayers wishing to challenge their tax assessments must do so during the statutory appeal period, generally the first two weeks of May. Taxpayers whose assessments do not increase may still challenge their assessments; however, they must also do so within the appeal period, and they generally will not receive written notice of the dates for appeal.

Appeal dates may differ from county to county, so taxpayers must check with the local assessing authority for the correct appeal dates. Failure to request an assessment conference with the county property valuation administrator during this period will generally preclude the taxpayer from any further challenge to the assessment or the tax bill for that year.

 

Updated December 2007

Unit Value Update

A new interpretation by the Kentucky Revenue Department is affecting many public service companies (e.g., electric and gas utilities). Property tax is imposed on the unit value of the company's "operating property" (KRS 136.120) -- defined as both operating tangible property and intangible "franchise value." In the past, the Department allocated the franchise among various classes of tangible property – some of which have low state tax rates and local tax exemptions. The Department has now begun taxing the intangible "franchise" at the maximum state and local tax rates for tangible property. This has resulted in enormous additional tax assessments for these companies. The Department maintains that their new interpretation is compelled by KRS 136.120(2)(c), which states the intangible franchise to be taxed "at the same rate as the tangible property of other taxpayers not performing public services." The language of the statute has not changed, so this represents a shift in policy by the Department. The issue is before the Kentucky Board of Tax Appeals.

 

Updated September 2007

Future Plans to Use Property for Religious Purposes Triggers Tax Exemption

The Kentucky Court of Appeals recently ruled that property owned by a religious institution is exempt from ad valorem taxes under Section 170 of the Kentucky Constitution, regardless of whether the property is currently being used for religious purposes. In St. Andrew Orthodox Church v. Thompson, 2006 CA-00305-MR and 2006-CA-0058-MR (Aug. 10, 2007), a church purchased two five-acre lots with two single-family houses. St. Andrew had future plans to build a larger church on the lots, but in the meantime, was renting the houses to non-church members and using the rent to pay the mortgage. The assessor argued that the property was not eligible for the Section 170 tax exemption, since it was not being used for religious purposes. The Court found that a 1990 amendment to Section 170 had broadened the previous constitutional exemption (which had required actual use), so that the intent to use the property for religious purposes in the future was sufficient to exempt the property under Section 170. The decision is awaiting possible review by the Kentucky Supreme Court.