What is the Kentucky real estate transfer tax rate?
The rate is $0.50 for each $500 of value or fraction of $500, set by KRS 142.050(2). That works out to 0.1%. There are no tiers and no higher rate for commercial property, so a fourplex, a 24-unit building and a 300-unit complex all pay the same percentage.
Value means the full actual consideration paid or to be paid, including the amount of any liens on the property. If a buyer takes over your existing loan, the assumed balance is part of the taxable value, not a deduction from it. For a gift, or a deed showing only nominal consideration, value is the estimated open-market price between a willing buyer and a willing seller.
Because the tax rounds up to the next $500, a $2,000,250 price is taxed as $2,000,500. The difference is 50 cents. On commercial deals, rounding never matters; the rate does, and Kentucky’s is among the lowest of any state that has the tax at all.
Who pays transfer tax in Kentucky?
The seller. KRS 142.050(2) imposes the tax on the grantor named in the deed. Many states leave the question to custom, so buyers and sellers haggle over it. Kentucky answered it in the statute, which is why the transfer tax normally sits on the seller’s side of a Kentucky settlement statement.
The parties can still agree that the buyer reimburses the seller, and on a negotiated commercial deal that sometimes happens as part of a credit. That agreement shifts the economics between the parties. It doesn’t change who the law treats as liable.
How and where the tax is collected
The county clerk collects it. Under KRS 142.050(3), when a deed evidencing a taxable transfer is offered for recording, the clerk computes the tax from the value stated in the deed and collects it before the deed is accepted. The clerk then certifies the date and amount of payment on the deed itself.
The tax is collected only once per transaction, in the county where the deed must be recorded under KRS 382.110(1). If a property straddles a county line, it’s paid where the greater part of the land sits.
Kentucky’s transfer tax is a county revenue source. Under KRS 142.050(4), the clerk keeps 5% as a collection fee and pays the balance to the county treasurer every three months for deposit in the county general fund. There’s no separate city or county transfer tax layered on top, so Louisville, Lexington, Bowling Green and rural counties all charge the same 0.1%.
Kentucky transfer tax exemptions that matter to investors
KRS 142.050(7) lists the transfers the tax doesn’t reach. Several of them come up in apartment ownership, especially when a building moves between an owner and an entity.
- Transfers between a limited liability company and its members (subsection 7(o)).
- Transfers between a person and an entity for nominal consideration, up to the transferor’s proportionate interest in the entity (7(k)).
- Distributions from an entity to an owner or shareholder on dissolution, for nominal consideration, up to that owner’s proportionate interest (7(m)).
- Mergers, consolidations and conversions between partnership, limited partnership, corporation and LLC forms (7(h)).
- Transfers between a subsidiary and its parent for no or nominal consideration, or for cancellation or surrender of stock (7(i)).
- Foreclosures and voluntary surrenders in lieu of foreclosure (7(j)).
- Transfers between spouses, between former spouses in a divorce, and between parent and child or grandparent and grandchild for nominal consideration (7(e), 7(l)).
- Deeds solely to secure or release a debt, deeds that confirm or correct an earlier deed, partition deeds and tax sales (7(c), 7(d), 7(g), 7(f)).
- Transfers between a trustee and a successor trustee, and certain transfers into and out of trusts under subsection 8.
LLC transfers, entity sales and 1031 exchanges
Kentucky makes it cheap to restructure ownership. Deeding a building into an LLC you own, or from the LLC back to its members, is exempt under subsection 7(o). A transfer from you to an entity for nominal consideration is exempt up to your proportionate share of that entity, so if you own 60% of the LLC, 60% of the value is exempt and the rest is taxed.
Kentucky has no controlling-interest transfer tax. The tax in KRS 142.050 is imposed on deeds, so when the membership interests of the LLC that owns a building are sold and no deed is recorded, there’s nothing for the clerk to collect. Lenders, title insurers and liability issues usually decide whether an entity sale makes sense in Kentucky. At 0.1%, transfer tax seldom tips the decision.
A 1031 exchange isn’t on the exemption list. When you sell the relinquished property, the deed to the buyer is a taxable sale and you pay the 0.1% like any other seller. The exchange defers federal and Kentucky income tax on the gain; it doesn’t touch the transfer tax.
Worked example: Kentucky transfer tax on an apartment sale
Take a 30-unit building in Lexington sold for $2,000,000 and a 96-unit complex in Louisville sold for $5,000,000, each by warranty deed to an unrelated buyer.
On the $2,000,000 sale, divide by $500 to get 4,000 units of value. Multiply by $0.50 and the transfer tax is $2,000. On the $5,000,000 sale, 10,000 units at $0.50 gives $5,000. In both cases the seller pays it to the Fayette or Jefferson County clerk when the deed is recorded, and there’s no city or county add-on to list as a separate line.
If the buyer assumes a $1,400,000 loan as part of the $2,000,000 price, the taxable value is still $2,000,000, because KRS 142.050 counts liens in the consideration. Have your title company confirm the figure against the value stated in the deed before closing.
| Line item | $2,000,000 sale | $5,000,000 sale |
|---|---|---|
| Taxable value in $500 units | 4,000 | 10,000 |
| Kentucky transfer tax at $0.50 per $500 | $2,000 | $5,000 |
| City or county add-on | $0 | $0 |
| Total transfer tax, paid by seller | $2,000 | $5,000 |
| Share of price | 0.1% | 0.1% |
Kentucky compared with neighboring states
Kentucky sits at the low end of its region. Tennessee charges more than three times as much and puts it on the buyer. Ohio adds a permissive county fee to its state fee, and West Virginia stacks a county tax on a state tax. Virginia charges both a recordation tax and a grantor tax.
| State | Rate on a deed | On a $2,000,000 sale |
|---|---|---|
| Kentucky | $0.50 per $500 (0.1%), on the grantor | $2,000 |
| Ohio | Mandatory 1 mill fee plus county fee up to 3 mills | $2,000 to $8,000 |
| West Virginia | $1.10 per $500 state, plus county tax of at least $0.55 per $500 | $4,400 state, $2,200 or more county |
| Virginia | 25 cents per $100 recordation tax plus 50 cents per $500 grantor tax | $5,000 plus $2,000 |
| Tennessee | 37 cents per $100, on the buyer | $7,400 |
How the transfer tax fits into your total selling costs
At 0.1%, the Kentucky transfer tax is one of the smallest lines on your closing statement. Commissions, if you use a broker, and loan payoff costs such as prepayment penalties or defeasance are usually far larger. Income tax is larger still.
Kentucky taxes capital gains as ordinary income, and House Bill 1 (2025) cut the individual rate from 4% to 3.5% for tax years beginning on or after January 1, 2026. On top of that, federal capital gains tax applies, and the part of your gain that comes from depreciation is taxed as unrecaptured Section 1250 gain at up to 25%. On a building bought for $1,000,000 and sold for $2,000,000 after years of depreciation, the tax on the gain can dwarf the $2,000 transfer tax many times over.
That’s why the planning conversation in Kentucky centers on a 1031 exchange, an installment sale, or timing the sale around a year with lower income. The transfer tax just gets paid.
Before you close: a Kentucky transfer tax checklist
Most Kentucky transfer tax problems come from the value stated in the deed, not the rate. The clerk computes the tax from the deed, so the figure has to match the real consideration, liens included.
- Confirm the consideration in the deed matches the purchase price, including any loan the buyer assumes.
- If personal property such as furniture or equipment is part of the price, agree on the allocation in the contract before the deed is drafted.
- For a transfer into or out of an LLC you own, cite the exemption subsection on the deed so the clerk can apply it.
- Budget the 0.1% on the seller’s side of the settlement statement unless the contract shifts it.
Selling your Kentucky apartment building to Skyline
Skyline buys apartment buildings with five or more units across Kentucky, including Louisville, Lexington, Bowling Green, Owensboro and Northern Kentucky. We buy directly, can offer seller-carry terms when spreading out your gain helps, and work within 1031 deadlines if you’re exchanging.
Send the address and unit count through the form on this page, or call (469) 660-2977. We typically respond within 48 hours, and the closing cost split, including the transfer tax line, is spelled out in our offer.
