Kentucky

Property Classification:

For purposes of property taxation classification Kentucky statutes consider land used for the growing of timber as agricultural land. Kentucky law contains no specific provisions relating to the taxation of forests and open-space land.

Agricultural land - is any tract of land, including all income-producing improvements, of at least 10 contiguous acres in area used for the production of livestock, livestock products, poultry, poultry products and/or the growing of tobacco and/or other crops including timber, or where devoted to and meeting the requirements and qualifications for payments pursuant to agriculture programs under an agreement with the state or federal government (KRS 132.010(9)).

Horticultural land - is any tract of land, including all income-producing improvements, of at least 5 contiguous acres in area commercially used for the cultivation of a garden, orchard, or the raising of fruits or nuts, vegetables, flowers or ornamental plants (KRS 132.010(10))

Land under improvements - The total area of land devoted to agricultural or horticultural use includes the area of all land under farm buildings, greenhouses and like structures, lakes, ponds, streams, irrigation ditches and similar facilities, and garden plots devoted to growth of products for on-farm personal consumption. It does not include land used in connection with dwelling houses such as lawns, drives, flower gardens, swimming pools or other areas devoted to family recreation (KRS 132.450)

Owners granted zoning for other use - Land devoted to agricultural or horticultural use, where the owner or owners have petitioned for, and been granted, a zoning classification other than for agricultural or horticultural purposes qualifies for the agricultural or horticultural assessment until such time as the land changes from agricultural or horticultural use to the use granted by the zoning classification (KRS 132.450).

Partial change in use - When the use of a part of a tract of land assessed as agricultural or horticultural land is changed either by conveyance or other action of the owner, the right of the remaining land to be retained in the agricultural or horticultural assessment continues if it meets the minimum requirements, except the minimum 10 contiguous acre requirement is not applicable if any portion of the agricultural or horticultural land has been acquired for a public purpose as long as the remaining land continues to meet the other requirements of this section (KRS 132.450).

Value in excess of use - When land has a value in excess of that for agricultural or horticultural use the property valuation administrator shall enter into the tax records the value of the property according to its fair cash value. However, the valuation of qualifying land for tax purposes is its agricultural or horticultural value (Sec. 132.450, KRS).

Failure of land to qualify for classification - When land that has been valued and taxed as agricultural land for five or more consecutive years under the same ownership, fails to qualify for the classification through no other action on the part of the owner or owners other than ceasing to farm the land, the land will retain its agricultural classification for assessment and taxation purposes. Classification as agricultural land will expire upon change of use by the owner or owners or upon conveyance of the property to a person other than a surviving spouse (KRS 132.450).

Converted property - When land valued and taxed as agricultural or horticultural land is converted to any other use after January 1 of the tax year, that portion of the land upon which the use is changed will be subject to tax for the succeeding tax year at its fair cash value. The owner of the property at the time the land use change is initiated must, within 90 days, report the change to the property valuation administrator. The owner must provide to the property valuation administrator information concerning the most recent sale or lease of the property, copies of any appraisal or feasibility reports made, and any other information useful in determining the fair cash value of the property (KRS 132.454).

Mineral interests and standing timber - Mineral interests in real estate owned separately from the interest in the surface are taxable as real estate and should be listed separately and assessed separately from the surface interests. The same is true of standing timber. However, standing timber is not taxed separately unless the tracts have pole size and saw-log size stands and are used principally for growing timber.

Valuation and Assessment:

Agricultural and horticultural land is assessed on the basis of the land's value for agricultural or horticultural uses.

Valuation basis: The use value of agricultural or horticultural land is based upon income producing capability and comparable sales of farmland purchased for farm purposes when the price is indicative of farm use value, excluding sales representing purchases for farm expansion, better accessibility, and other factors that inflate the purchase price beyond farm use value. (KRS 132.010).

The State of Kentucky does not have a severance or yield tax on timber or timber products.

• Kentucky Legislative Research Commission, 2003. Tax and Related Incentives for Forest Management. http://www.e-archives.ky.gov/Pubs/LRC/Rr307.pdf

• Girton, D. 2012. Legal action looms on woodland tax assessment issues. Kentucky Woodlands Newsletter 2012(August).