{"data":{"id":"us-ky/krs-132.191","jurisdiction":"us-ky","citation":"KRS 132.191","heading":"Valid valuation methods -- Minimum applicable appraisal standards --","body":"Property valuation of multi -unit rental housing subject to government\nrestriction on use.\n(1) The General Assembly recognizes that Section 172 of the Constitution of Kentucky\nrequires all property, not exempted from taxation by the Constitution, to be assessed\nat one hundred percent (100%) of the fair cash value, estimated at the price the\nproperty would bring at a fair voluntary sale, and that it is the responsibility of the\nproperty valuation administrator to value property in accordance with the\nConstitution.\n(2) The General Assembly further recognizes that property valuation may be\ndetermined using a variety of valid valuation methods, including but not limited to:\n(a) A cost approach, which is a method of appraisal in which the estimated value\nof the land is combined with the current depreciated reproduction or\nreplacement cost of improvements on the land;\n(b) An income approach, which is a method of appraisal based on estimat ing the\npresent value of future benefits arising from the ownership of the property;\n(c) A sales comparison approach, which is a method of appraisal based on a\ncomparison of the property with similar properties sold in the recent past;\n(d) A subdivision de velopment approach, which is a method of appraisal of raw\nland:\n1. When subdivision and development are the highest and best use of the\nparcel of raw land being appraised; and\n2. When all direct and indirect costs and entrepreneurial incentives are\ndeducted from the estimated anticipated gross sales price of the finished\nlots, and the resultant net sales proceeds are then discounted to present\nvalue at a market -derived rate over the development and absorption\nperiod; and\n(e) The approaches listed in subsection (5) of this section for multi -unit rental\nhousing that is subject to government restriction on use.\n(3) The valuation of a residential, commercial, or industrial tract development shall\nmeet the minimum applicable appraisal standards established by:\n(a) The Kentucky Department of Revenue, as stated in its Guidelines for\nAssessment of Vacant Lots, dated March 26, 2008; or\n(b) The International Association of Assessing Officers.\n(4) To be appraised using the subdivision dev elopment approach, a subdivision\ndevelopment shall consist of five (5) or more units. The appraisal of the\ndevelopment shall reflect deductions and discounts for:\n(a) Holding costs, including interest and maintenance;\n(b) Marketing costs, including commissions and advertising; and\n(c) Entrepreneurial profit.\n(5) (a) The property valuation of multi -unit rental housing that is subject to\ngovernment restriction on use may be determined:\n1. a. Through an annual net operating income approach to value that\nuses a ctual income and stabilized operating expenses that are\nbased on the actual history of the property, when available, and a\ncapitalization rate.\nb. The methodology employed in the projection of income, expenses,\nand capitalization rate used shall be consist ent with the Uniform\nStandards of Professional Appraisal Practice.\nc. The capitalization rate shall be:\ni. Based on the risks associated with multi -unit rental housing\nsubject to government restriction on use, including\ndiminished ownership control; income  generating potential;\nliquidity; the condition of the property; the class of the\nproperty; and the property's location and size;\nii. Equal to or greater than the capitalization rate used for\nvaluing multi -unit rental housing that is not subject to\ngovernment restriction on use; and\niii. In the range of fifty (50) to one hundred fifty (150) basis\npoints above the most recent quarterly survey of the national\naverage cap rates of multifamily properties published by\nrealtyrates.com or a successor organization.\nd. The department shall publish the capitalization rate range for the\nproperty valuation administrators to use on its website at the\nbeginning of each year; or\n2. By adjusting the unrestricted market value of the multi -unit rental\nhousing, computed without regard to any government restriction on use\napplicable to the multi -unit rental housing, based on the ratio of the\naverage annual rent of those units of the property that are subject to\ngovernment restriction on use to the average annual rent of comparab le\nmulti-unit rental housing that is not subject to government restriction on\nuse.\n(b) Income tax credits received under Section 42 of the Internal Revenue Code or\nfrom any state or federal program shall not be included in the methods used\nunder paragraph (a) of this subsection in determining the income attributable\nto the multi-unit rental housing or in any separate intangible assessment.\n(c) 1. The owner of multi-unit rental housing shall:\na. Notify the property valuation administrator if:\ni. The property is subject to government restriction on use;\nii. The property is no longer subject to government restriction\non use; or\niii. A foreclosure action has been brought upon the property; and\nb. File with the property valuation administrator, on a form\nprescribed by the department, the information necessary for the\nmulti-unit rental housing to be valued based on the methods\ndescribed in paragraph (a) of this subsection.\n2. The notification shall b e in writing and submitted to the property\nvaluation administrator within sixty (60) days of the date on which the\napplicable circumstance listed in subparagraph 1.a.i., ii., or iii. of this\nparagraph occurred.\n3. An owner who fails to comply with this par agraph may be subject to\npenalties in an amount not to exceed two hundred dollars ($200) as\ndetermined by the department.\n(d) The department shall promulgate administrative regulations in accordance\nwith KRS Chapter 13A to adopt forms, penalties, and proce dures to carry out\nthis subsection.","path":["KRS Chapter 132"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=53528","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:50:23Z","sha256":"1ea81d408074bdf5afe86562d446068de589ff26fa68323e198e707ef7dd7677","source_id":"us-ky","stale":false,"prev":"us-ky/krs-132.190","next":"us-ky/krs-132.192"},"notice":"GroundRules: Original legal text. Not legal advice."}