Request By:
Ms. Margaret Woosley
Grayson County Clerk
Courthouse
Leitchfield, Kentucky 42754
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
You request the opinion of this office concerning the application of the real estate transfer tax found in KRS 142.050.
Question No. 1:
"Would there be tax on a deed from an individual to a city through the master commissioner, through condemnation proceedings?"
The deed tax upon the grantor named in the deed is imposed at the rate of fifty cents (50 ) for each five hundred dollars ($500) of value or fraction thereof. Subsection (8) records the exceptions to the imposition of the tax:
"(8) The tax imposed by this section shall not apply to a transfer of title:
(a) Recorded prior to March 27, 1968;
(b) To (in the event of a deed of gift or deed with nominal consideration) or from the United States of America, this state, any city or county within this state, or any instrumentality, agency, or subdivision hereof;
(c) Solely in order to provide or release security for a debt or obligation;
(d) Which confirms or corrects a deed previously recorded;
(e) Between husband and wife, or parent and child, with only nominal consideration therefor;
(f) On sale for delinquent taxes or assessments;
(g) On partition;
(h) Pursuant to mergers of corporations;
(i) By a subsidiary corporation to its parent corporation for no consideration, nominal consideration, or in sole consideration of the cancellation or surrender of the subsidiary's stock;
(j) Under a foreclosure proceeding;
(k) Between individuals and a corporation, with only nominal consideration therefor, if those individuals are the exclusive owners of that corporation."
The commissioner's deed in question is dated April 30, 1982. It was later left in your office for recording. The deed recites that the deed arose out of the condemnation procedure brought by the city of Caneyville. The specific monetary consideration was not specified in the commissioner's deed.
Since the deed was from private owners and actually involved substantial consideration (see suit papers in circuit court for actual amount of the consideration), it is our opinion that the deed transfer is taxable under KRS 142.050. The tax can be computed under KRS 142.050(2) by determining the actual consideration received by grantors from the city. The duty of paying the tax clearly falls on the seller. The grantors cannot avoid the incidence of the tax just because the deed does not spell out the actual consideration. See 47 Am.Jur.2d, Judicial Sales, § 1, p. 299.
Question No. 2:
"In cases where there would be no tax due, must the fair market value be on the deed? "
Where only nominal consideration is shown on a deed, and the clerk has reason to believe that substantial consideration was paid, and where the tax applies, the value, for purposes of computing the tax, would be the estimated price the property would bring in an open market and under the then prevailing market conditions in a sale between a willing seller and a willing buyer, both conversant with the property and with prevailing general price levels. Of course, where the clerk can actually determine by good proof the actual substantial consideration paid, that actual amount paid would govern in calculating the proper tax to be placed on it. See KRS 142.050(1)(b) 1. and 2. Where the deed falls within one of the exceptions to the tax under KRS 142.050(8), no specific or actual consideration is required to be shown in the deed.
Tax-levying statutes should receive a reasonable interpretation with a view to carrying out their purpose and intent.