Agricultural property is taxed with a special "use" valuation for the land. All improvements (including residential homes, barns and outbuildings) are taxed similar to if they were not on agricultural property and should be valued at fair cash value. In addition, the valuation of the residential property includes the surrounding land taxed at a fair cash value. The lot that your home sits on does not qualify for the land/use valuation method. See Residential Property for more information on how your home is valued.
The purpose of the agricultural/horticultural land use valuation is to stimulate the continuation of farming operations and encourage the preservation of farmland in Kentucky by providing property tax relief. The value of land used for farm production is assessed at a “use” value, which results in a lower taxable dollar value per acre than fair cash value for the same land. The program was enacted through a constitutional referendum in 1969 to keep rising property assessments, particularly in developing areas, from forcing farmers out of business to pay real estate taxes and accelerating the land conversion process.
The PVA calculates the agricultural or horticultural use value based on standard appraisal techniques, using methodologies established by the Kentucky Department of Revenue’s Office of Property Valuation. Such methods include an analysis of comparable land sales purchased for agricultural use with consideration being given for influencing factors, and agricultural use values based on income-producing capabilities arrived at by the use of Soil Conservation Service land use classifications.
For more information about Agricultural Exemptions or for information about Horticultural Exemptions please click here.