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For more information on any of the items listed below, just click on that item.
Assessed value and the tax rate
The foundation for property taxation in Kentucky comes directly from the Constitution of Kentucky (Sections 3, 170, 171, and 172), which requires that all property be taxed unless specifically exempted by the Constitution.
The Constitution further directs that taxable property must be assessed at its fair cash value, estimated at the price it would bring at a fair voluntary sale.
The PVA is required by law to physically examine each parcel of taxable real property no less than once every four years.
Finding the market value of your property involves discovering the price most people would pay for it in its present condition. It's not quite that simple, though, because the PVA assessor has to find what this value would be for every property, no matter how big or small. The PVA's job doesn't stop there. Each year it has to be done all over again, because-- as we all know-- the market value of almost everything changes from one year to the next.
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Properties are appraised so that those of us who want the advantages of having schools, fire and police protection, and other public benefits (which means just about all of us), can absorb our fair share of the cost, in proportion to the amount of money our individual properties are worth.
The property tax is part of a well-balanced revenue system. It is a more stable source of money than sales and income taxes because it does not fluctuate when communities have recessions. When the community spends your tax dollars on better schools, parks, and so on, your property values rise. Some of the windfall benefits you receive are recaptured by the property tax.
To find the value of any piece of property the PVA must first know what properties similar to it are selling for, what it would cost to replace it, how much it takes to operate and keep it in repair, what rent it may earn, and many other dollar facts affecting its value, such as the current rate of interest charged for borrowing the money to buy or build properties like yours.
Using this information, the PVA can then determine the property value using the three methods listed below:
Sales comparison approach
The first method compares your property to others that have sold recently. However, these prices must be analyzed very carefully to get the full picture. One property may have sold for more than it was really worth because the buyer was in a hurry and would pay any price. Another may have sold for less money than it was actually worth because the owner needed cash right away. The property was sold to the first person who made an offer.
When using the sales comparison approach, the PVA must always consider such overpricing or under pricing and analyze many sales to arrive at a fair valuation of your property. Size, quality, condition, location, and time of sale are also important factors to be considered.
Cost approach
A second method to value your property is based on how much money it would take, at current material and labor costs, to replace your property with one similar. If your property is not new, the PVA must also estimate how much a lot like yours would be worth if vacant.
Income approach
The third method is to evaluate how much income your property would produce if it were rented as an apartment house, a store, or a factory. The PVA must consider operating expenses, taxes, insurance, maintenance costs, and the return most people would expect on your kind of property.
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WHY ASSESSED VALUES MAY CHANGE FROM YEAR TO YEAR?
When market value changes, so does assessed value. For instance, if you were to add a garage to your home, the assessed value would increase.
However, if your property is in poor repair, the assessed value would decrease.
The PVA has not created the value. PEOPLE MAKE VALUE by their transactions in the marketplace. The PVA simply has the legal responsibility to study those transactions and appraise your property accordingly.
ASSESSED VALUE AND THE TAX RATE
The PVA office has nothing to do with the total amount of taxes collected. The PVA's primary responsibility is to find the fair market value of your property, so that you may pay only your fair share of the taxes.
The amount of tax you pay is determined by a TAX RATE applied to your property's ASSESSED VALUE. The tax rate is determined by all the taxing agencies-- city or county, school districts, and others-- and depends on what is needed to provide all the services you enjoy.
The PVA office also keeps track of ownership changes, maintains maps of parcel boundaries, keeps descriptions of building and property characteristics up to date, keeps track of individuals and properties eligible for exemptions and other forms of property tax relief, and, most importantly, analyzes trends in sales prices, construction costs, and rents to estimate the value of all assessable property. All this must be done economically (less than 1/10th the cost of hiring someone to appraise your property).
WHAT ARE YOUR RIGHTS AND RESPONSIBILITIES?
If your opinion of the value of your property differs from the PVA, then by all means go to the office and discuss the matter. Our staff will be glad to answer your questions about the appraisal and explain how to appeal if you cannot come to an agreement. The PVA office relies on the property owner for information. You can help by providing accurate information.
If you feel taxes are too high, you should make your opinion known to the proper taxing authorities. Ask about your eligibility for special exemptions.
Press here to enter the appeal process page.
Information found on this page was provided by the International Association of Assessing Officers Website (www.iaao.org).