Request By:
Alan T. Slyn
Attorney at Law
310 West Liberty Street-Suite 510
Louisville, Kentucky 40202
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Alex W. Rose, Assistant Attorney General
You have sought our opinion on the question of whether broker's commissions, financing costs, and other similar items are to be included in real property assessments made pursuant to KRS 132.190(3). The statutory provision in question states as follows:
"Property shall be assessed for taxation at its fair cash value, estimated at the price it would bring at a fair voluntary sale, . . ."
Plainly, the answer to your question revolves around the meaning of the phrase "fair cash value." It has been said ". . . the proper criterion of fair cash value for any property. . . is the price the seller willing but not forced to sell would take and the buyer willing but not forced to buy would give for it."
Kentucky Tax Commission v. Jefferson Motel, Inc., Ky., 387 S.W.2d 293, 296 (1965).
It is implicit in your letter that you are concerned with the situation in which the property to be assessed has recently been sold and thus the assessment is being made not on the basis of an estimate but on the basis of the actual consideration recently paid. It is our opinion that no deduction should be made for broker's commissions or other items in this situation. The basis for our position is simply that the total consideration paid for a piece of property represents what "a buyer willing but not forced to buy would give for it." It might be noted that this approach is congruent with KRS 142.050(1)(b) which defines "value" for purposes of assessment of the deed transfer tax. It should also be noted that the tax assessor is not restricted to one specific method for assessing real property so long as the assessment is fair and equitable.