KRS 132.195: Assessment of possessory interest in tax-exempt real or personal property -

- Lessee's liability. (Effective until January 1, 2027)

(1) When any real or personal property which is exempt from taxation is leased or

possession is otherwise transfer red to a natural person, association, partnership, or

corporation in connection with a business conducted for profit, the leasehold or

other interest in the property shall be subject to state and local taxation at the rate

applicable to real or personal property levied by each taxing jurisdiction.

(2) Subsection (1) of this section shall not apply to interests in:

(a) Industrial buildings, as defined under KRS 103.200, owned and financed by a

tax-exempt governmental unit or tax -exempt statutory authority un der the

provisions of KRS Chapter 103, the taxation of which is provided for under

the provisions of KRS 132.020 and 132.200;

(b) Federal property for which payments are made in lieu of taxes in amounts

equivalent to taxes which might otherwise be lawfully assessed;

(c) Property of any state-supported educational institution;

(d) Vending stand locations and facilities operated by blind persons under the

auspices of the Division of Kentucky Business Enterprise, regardless of

whether the property is owned by the federal, state, or a local government;

(e) Property of any free public library;

(f) Property in Fayette County, Kentucky, administered by the Department of

Military Affairs, Bluegrass Station Division;

(g) All privately owned leasehold interests in res idential property when the

residential property is owned in fee simple by a purely public charity as of

July 1, 2020:

1. When the real property includes a residential property unit that is:

a. Leased by the purely public charity for a period of at least one (1)

year to an individual person who is fifty -five (55) years of age or

older;

b. Maintained as the individual person's permanent residence under a

lease agreement that:

i. Prohibits the lessee from subleasing the unit; and

ii. Provides that the lessee's possessory interest in the unit is

terminable by the lessor upon the death of the lessee, the

physical or mental inability of the lessee to continue to reside

in the unit, or the lessee's relo cation to a nursing home or

similar assisted living facility; and

c. Constructed on or before July 1, 2020, or constructed after July 1,

2020, on land that was privately owned in fee simple by the purely

public charity on or before July 1, 2020;

2. If the fee simple ownership is transferred by the purely public charity

after July 1, 2020, it shall be transferred to another purely public charity

and the requirements established for the residential property unit in

subparagraph 1. of this paragraph shall be maintained; and

3. The taxation of which is provided for under KRS 132.020 and 132.200;

or

(h) All privately owned leasehold interests in residential property owned in fee

simple by a purely public charity, which is exempt from ad valorem taxation

under Kentucky Constitution Section 170, when the residential property unit

is leased by the purely public charity to an individual person who is:

1. Receiving medical or educational supportive services from the purely

public charity; and

2. a. A postsecondary educational participant;

b. A minor;

c. Sick, disabled, or impoverished; or

d. Over the age of sixty-five (65).

(3) Taxes shall be assessed to lessees of exempt real or personal property and collected

in the same manner as taxes assessed to owners of other rea l or personal property,

except that taxes due under this section shall not become a lien against the property.

When due, such taxes shall constitute a debt due from the lessee to the state, county,

school district, special district, or urban -county governm ent for which the taxes

were assessed and if unpaid shall be recoverable by the state as provided in KRS

Chapter 134.

Effective: April 15, 2020