State Summary

Tax Collection Method: Liens
Primary Bidding Type: Premium
Redemption Period: 1 year
Redemption Interest Rate/Flat Penalty: 12% simple interest per annum

The following information summarizes the life cycle, requirements, and administering of tax liens in the state of Kentucky. Please read this information carefully. There are tax collection laws that pertain to all counties in Kentucky, but be aware that there are subtle differences between the counties as well. When the word "typical" is used in the FAQs below, it indicates that most counties use this procedure/follow this convention, but not all counties.

Is Kentucky a tax lien or a tax deed state?
Kentucky is a tax lien state.

What is the name of the county official whom typically collects property taxes in Kentucky?
Sheriff.

When are property taxes due in the state of Kentucky?
Property tax payments for the year of assessment are due on December 31. Taxpayers receive a 2% discount on their tax bill if they pay the bill by November 1.

When do property taxes become delinquent in the state of Kentucky?
Property tax payments for all counties in Kentucky become delinquent beginning January 1 following the year of assessment. At that point, all unpaid tax bills are subject to a 5% penalty on the amount owed. Tax bills paid after January 31 are subject to a 10% penalty on the amount owed.

What is the name of the county official whom typically conducts tax lien sales in Kentucky?
The County Clerk in some counties, and the Sheriff in other counties.

When does the typical Kentucky county hold their annual tax lien sale?
The annual tax lien sale for most Kentucky counties is held in July or August.

What are the registration requirements for the typical Kentucky tax lien sale?
Generally, all potential bidders must register with the County Clerk at least one week before the sale. Some counties require a deposit usually based on the amount that the investor anticipates to spend at the sale, and some counties also require a registration fee (not to exceed $250).

In addition, third-party tax lien purchasers must register annually with the Kentucky Department of Revenue to participate in Kentucky Delinquent Property Tax Sales.

What is the bidding type used at a typical Kentucky tax lien sale?
This can vary by county, but many Kentucky counties use a "sports draft style" auction. In a sports draft style auction, the order in which investors will purchase tax liens is selected at random. Let's assume that there are 30 investors at a sale with bidder numbers of 1-30. The organizer of the sale selects one of these 30 numbers at random. If he/she picks 12, bidder number 12 will get the first "pick". He/she is able to pick and purchase any available tax lien certificate. Then bidders 13, 14, 15 and so on get a chance to purchase their selections. When all 30 bidders have had a chance to select and purchase their first lien, the next round starts, usually going in reverse order (i.e. 11, 10, 9, 8 and so on, instead of 12, 13, 14, 15 and so on). The auction continues until there are either no more tax lien certificates or interested investors remaining.

Generally, investors pay the face value (minimum bid) of the tax lien at sports draft style auctions. Investors can "drop out" of the draft at any time. For this type of a sale, it is crucial that investors show up on time and get their bidder numbers. Some counties will not allow latecomers to participate in the draft, while other counties may give latecomers the last pick in the next round. Rules and guidelines for sports draft style auctions will vary by county, so be sure to read these rules and/or guidelines before participating in the sale.

What forms of payment are generally accepted at a typical Kentucky tax lien sale?
Generally, cash and certified funds.

What are the general terms of payment for the typical tax lien certificate purchased at a Kentucky tax lien sale?
Generally, full payment for the tax lien certificate is due the day of the sale.

What is the maximum return (interest rate and/or flat penalty rates) investors earn while they hold the tax lien certificate?
The state-mandated interest rate is 12% per annum, or 1% accrual per month.

What is the redemption period for tax lien certificates in Kentucky?
One year from the day that the tax lien certificate is sold to the investor.

Are tax liens certificates offered "over-the-counter" in Kentucky?
No.

What is the name of the county official whom typically determines the values of properties on a annual basis?
Property Valuation Administrator, or PVA.

For more information on the life cycle, requirements, and administering of tax liens in the state of Kentucky, refer to Chapter 134: Payment, Collection, and Refund of Taxes in the Kentucky Revised Statutes.

Kentucky County Reference