Tangible personal property is physical property, usually movable, that has value and utility in and of itself (examples: trade tools, fixtures, office equipment, inventory). In determining whether an item is real property or tangible personal property, the following aspects must be considered:
- The manner in which the item is fixed or attached to the real estate.
- The intention of the party who attached the item.
- The purpose for which the premises are used.
Generally, items remain personal property if they can be removed without damage to the real estate or to the item itself. Machinery bolted to the floor to prevent movement while in operation would remain personal property. If the machinery were built into the building in such a manner that its removal would produce considerable damage to the building, it would be part of the real estate.
All individuals and business entities who own, lease, or have a beneficial interest in taxable, tangible property located within Kentucky on January 1 must file a tangible property tax return. All tangible property is taxable, except the following:
- Personal household goods used in the home
- Crops grown in the year which the assessment is made and in the hands of the producer.
- Tangible personal property owned by institutions exempted under Section 170 of the Kentucky Constitution.
The taxable situs of tangible personal property in Kentucky are the Counties where the property is physically located.
Another way to define tangible personal property is that it is every physical item subject to ownership except real and intangible property.
Tangible Property Filing Requirements
- Kentucky does not allow consolidated and joint returns.
- Owners need to file a return for each property location within Kentucky.
- The return must include the property location by street address and county. A post office box is not acceptable as the property address.
- File the return between January 1 and May 15.
- Do not enclose the tangible return with the income tax return.
- File the return with the PVA in the county of taxable situs or with the Division of State Valuation.
- There is no extension for this return.
- Do not send payments with your return. The Sheriff in each county mails the tax bills. Returns filed after May 15 are considered omitted and will be billed by the Division of State Valuation.
Inventory Tax Credit
Marion County businesses will be eligible for a credit on their state income tax return, if they paid personal property taxes on any inventory (line items 31-36 on their personal property return) before Dec. 31, 2018. To calculate your inventory tax credit and for a copy of Schedule INV please find more information at the KY Department of Revenue’s website.
If more information regarding the Inventory Tax Credit is needed please feel free to call the KY Department of Revenue’s Inventory Credit Hotline at (502) 564-1555.