The COVID-19 pandemic has adversely affected many segments of our society, and property owners are among the groups that have suffered serious economic impacts. The hospitality industry has seen income from hotels, restaurants, casinos and entertainment venues evaporate as businesses were shuttered. Owners of apartments and office buildings have experienced substantial losses as tenants are unable to pay rent. The U.S. Census Bureau estimates that 17.6% of the tenants of occupied rental units in Kentucky were unable to pay their rent in May. Given the economic difficulties caused by the pandemic, it is not surprising that property owners would want to seek some relief from their 2020 property taxes. Unfortunately, Kentucky law will not provide much, if any, assistance.
Kentucky law requires that all taxable property is to be listed, assessed and valued as of January 1st of each year. KRS 132.220. Given the fact that COVID-19 was relatively unknown on January 1st, 2020, the Kentucky Department of Revenue and the local property valuation administrators are taking the position that any diminution in property values will not be relevant for the 2020 tax year. Any adjustment to the property value will take place in 2021. This means that property owners will be required to pay 2020 property taxes on their property’s pre-pandemic value, even though the loss of income will be felt this year.
To add insult to injury, Kentucky law does not provide an avenue for taxpayers to obtain immediate relief. Many states have statutes that allow property owners to seek an exemption or an exoneration from property taxes if the property’s value is adversely affected by a catastrophe (such as a fire) or a natural disaster (flood, earthquake, tornado). In those states, it could be argued that the COVID-19 pandemic is akin to a natural disaster. However, no such provision exists under Kentucky law, and the 2020 General Assembly did not take any action to address this issue.
Property owners did receive a few small measures of relief. Jefferson County PVA Colleen Younger delayed a scheduled reassessment of over 100,000 properties, including the Central Business District. Properties that were sold or improved in 2019 may still be reassessed, but the revaluation of other properties has been postponed until 2021. It is unclear whether any other counties will follow suit. In addition, the time for appealing property values was postponed for 60 days. Property owners can appeal their values from July 6–20, 2020, instead of the normal May appeal period. However, property tax bills will be issued at the normal time (fall/early winter).
Property owners who have suffered a loss in income due to the pandemic will undoubtedly be frustrated to learn that the decline in income will not result in a decline in value for 2020, but they should be prepared to appeal those values in 2021.
By Michele Whittington
Michele Whittington’s practice focuses on state and local taxation and administrative law. With more than 30 years of experience, she has represented taxpayers in a wide variety of tax and administrative matters, including real and personal property tax protests, public service corporation tax matters, occupational and license taxes, tax exemptions, and insurance company taxes.