Tax Lingo
Terms you will meet on an assessment notice, a deed or a tax bill.
Kentucky has had a tax on property since June 1, 1792, the date the State was created.
The Department of Revenue was created in 1936 to administer all state taxes.
In 1965 the Kentucky Court of Appeals ruled in the Russman vs. Luckett case that the full cash value standard must be adhered to.
The Department of Revenue was changed to the Revenue Cabinet in 1982. The Department of Property Taxation (renamed the Department of Property Valuation) was created. The department is comprised of the Commissioner’s Office plus three divisions: State Valuation; Local Valuation; Technical Support.
The Revenue Cabinet is one of the administrative agencies of the Executive Branch of State Government.
In 1990 the General Assembly as part of the Kentucky Educational Reform Act (KERA) mandated that all real property be assessed at 100% of Fair Cash Value.
Property tax is an ad valorem tax, which means according to value.
Real Property includes all lands within this state and improvements thereon.
Personal Property includes every species and character of property, tangible and intangible, other than real property.
Tangible Personal Property includes automobiles, construction equipment, manufacturing machinery, merchandise, livestock, and furniture and fixtures.
Two amendments were passed to lessen the tax burden on certain groups of property owners: the Agricultural Deferred Value Amendment and the Homestead Exemption, which was broadened to include totally disabled homeowners.
Taxpayer’s Rights
The Kentucky Department of Revenue 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 Kentucky taxpayer are protected by the KRC.
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.
Office of the Taxpayer Ombudsman P.O. Box 930 Frankfort, KY 40602-0930
| Term | Definition |
|---|---|
| Ad Valorem | Latin for “According to Value.” |
| Ad Valorem Tax System | The system of property taxation in which the tax liability is directly proportional to the Value of the property. |
| Address | 911 address-physical location; mailing address-owners location |
| Air Rights | Property interest in the space beginning a specified distance above the surface level of a parcel and extending for a specified distance |
| Appeal | The informal or formal action by an owner of a parcel to seek a change in the assessed value of the parcel |
| Appeal Period | The specific time period during which owners may file a formal appeal if they desire to contest the assessed value of a parcel. |
| Appraisal Date | The date upon which an official value estimate was made for the parcel. |
| Appraisal Process | See valuation process |
| Appraise | The act of estimating the value of a parcel |
| Appraised Value | The value resulting from the act of appraising |
| Assessed Value | The value at which the parcel is placed on the tax roll. It may differ from the appraised value because of fractional assessment multipliers and other statutory or policy reasons. |
| Assessment | See Assessed Value |
| Assessment Class | The grouping of parcels according to use. That is R-Residential, C-Commercial, F-Farm. |
| Assessment Date | January 1 for Real Estate |
| Assessment Level | The Assessed values of sold parcels is compared to the selling price to gain an indication of the level of assessment. |
| Assessment Notice | The official communication (legal notice) to the owner of a parcel stating the assessed value of his parcel. |
| Assessment Roll | The official listing of Assessed Values as of the Tax Lien Date upon which tax bills will be calculated. |
| Assessment Sale Ratio | Assessed Value divided by the Sale Price. |
| Assessment Year | The 365 days beginning with the assessment date. |
| Block and Lot | These are frequently components of a geographically organized Parcel Identification Number (PIN). Block usually refers to the individual map and lot refers to the individual parcel on the map. |
| Building Permit | A document usual issued by a local code enforcement and inspection department allowing construction to begin. A copy should be forwarded to the Assessor. |
| Certification Date | Date that the values of the tax roll are accepted by the Revenue Cabinet as being correct. |
| Condominium | A special form of property ownership whereby the owner receives full property rights and interest in a specifically described part of the structure and an undivided interest in the common areas and land. This type of ownership requires a master deed conforming to local statutes. |
| Consideration | The Sale Price officially recorded as the transaction price. |
| Deed | The instrument normally used to convey rights in a parcel. |
| Deed Book and Page | The location in the Clerks office where the recorded instruments can be found. |
| Deed-Quit Claim | A form of conveyance by which any interest the Grantor may possess (which could be actually none) is transferred to the Grantee without warranty of title. |
| Deed Type | Warranty, Quit Claim, Deed of Trust, Sheriff’s Deed, Deed of Correction, Strawmans Deed, etc. |
| Easement | The right held by one person to use the land of another for a specific purpose-sometimes ingress and egress or placing utility lines. |
| Effective Tax Rate | Tax rate expressed as a percentage of Market Value, usually equal to the Nominal (actual) tax rate if the assessment ratio is near 1.00 |
| Equalization | The process by which an appropriate governmental body attempts to ensure that all property within its jurisdiction is assessed at the same assessment ratio. |
| Exemption-Homestead | Freedom from taxation on all or part of the value of the property due to age of the owner |
| Exemption-Disability | Freedom from taxation on all or part of the value of the property due to total disability of the owner. |
| Fee Simple | Complete interest in the property subject only to the governmental powers such as eminent domain. |
| GIS | Geographic Information System-a digital base map system containing everything on the surface and underneath the surface of the earth on different layers. |
| Functional Obsolescence | Loss in value of a property resulting from changes in taste, preferences, technical innovations or market standards. |
| Grantee | One who acquires property by voluntary conveyance. |
| Grantor | One who voluntarily conveys property. |
| GRM | Gross Rent Multiplier |
| IAAO | International Association of Assessing Officers |
| Legal Description | A descriptive account of a parcel of land which sufficiently locates a parcel of land. |
| Levy | The amount of money that any taxing entity may collect in order to fund its budget. |
| Market Value | The most probable price that a property will bring in American dollars on the open market given a willing buyer and a willing seller and a reasonable length of time to market it with no undue stress. |
| Neighborhood | A group of parcels having similar characteristics and economic factors and are usually contiguous and homogeneous. |
| Owner | One who has dominion over property under the rules of law. |
| PIN | Property Identification Number (Map number) |
| Plat | A map that depicts the division of land into parcels. |
| Recording Date | The date that an instrument was officially recorded in the proper government office. |
| Sale Price | The reported consideration for the transfer of a property. |
| Split | The process of creating new parcels from existing parcels. |
| Subdivision | A tract of land that has been divided into marketable building lots. |
| Tax District | An identifier for a unique set of taxing authorities which collect taxes from a group of parcels. |
| Title | The official legal document which is accepted as proof of ownership. |
| Transfer | Official change of ownership. |
| Zoning | The exercise of the police power to restrict land owners as to the use of their land. |