Many people preparing a Kentucky quitclaim deed are surprised to learn that the county clerk may collect transfer tax when the deed is recorded. The good news is that Kentucky law also lists several exemptions.
Important Kentucky Transfer Tax Note:
Kentucky real estate transfer tax is generally $0.50 for each $500 of value or fraction of $500.
For a normal sale, the value is usually the full actual consideration paid or to be paid, including liens.
For a gift, nominal-consideration deed, or deed without stated consideration, value generally means the estimated open-market value of the property.
Example: if the taxable value is $100,000, the transfer tax would generally be about $100.
Some transfers are exempt, but the deed still needs to clearly fit the exemption being claimed.
What Is Kentucky Transfer Tax?
Kentucky transfer tax is collected when many deeds transferring real property are recorded.
The tax is imposed on the grantor and collected by the county clerk before a taxable deed is accepted for recording.
In plain English, the county clerk looks at the value declared in the deed and determines whether transfer tax must be collected before recording.
How Kentucky Decides the Taxable Value
Kentucky law looks at the value stated in the deed.
For a sale, that usually means the actual consideration paid or to be paid for the property, including liens.
For a gift, nominal-consideration deed, or deed without stated consideration, the value is generally the estimated price the property would bring in an open-market sale between a willing buyer and willing seller.
This is why the Certificate of Consideration matters. It helps document the value or consideration used for the deed transfer.
Official Kentucky Transfer Tax Source
Kentucky transfer tax and exemptions are listed in Kentucky Revised Statutes section 142.050.
Common Kentucky Transfer Tax Exemptions
Kentucky law lists several transfers that aren't subject to real estate transfer tax. Common exemption situations include:
- certain transfers to or from the United States, Kentucky, a city, county, or government agency
- deeds made solely to provide or release security for a debt or obligation
- deeds that confirm or correct a previously recorded deed
- transfers between husband and wife
- transfers between former spouses as part of a divorce proceeding
- sales for delinquent taxes or assessments
- partition deeds
- transfers involving certain mergers, consolidations, conversions, or business reorganizations
- certain transfers between parent and child or grandparent and grandchild for nominal consideration
- certain transfers from a trustee to a beneficiary
- certain transfers between trustees or to successor trustees
- certain deeds in lieu of foreclosure
Important:
This is a plain-English summary, not the full statutory list. The exemption must match the actual transfer and should be checked against KRS 142.050 before recording.
Gift Transfers and Family Transfers
Many quitclaim deeds are used for family transfers, estate planning, or no-money transfers.
Kentucky may still require value information even when no money changes hands. A gift deed or nominal-consideration deed may need to state the estimated open-market value of the property unless a specific exemption applies.
Some family transfers may qualify for an exemption, but not every family transfer is automatically exempt. For example, Kentucky law includes certain exemptions for transfers between spouses and certain nominal-consideration transfers between parent and child or grandparent and grandchild.
Sample Kentucky Transfer Tax Exemption Wording
If an exemption applies, the deed should usually state the exemption clearly.
Example:
This conveyance is exempt from the payment of transfer tax pursuant to KRS 142.050(7)(___).
The paragraph reference should match the actual exemption being claimed.
Some deeds also use more specific wording, such as identifying a transfer between spouses, a corrective deed, a gift transfer, or another statutory exemption.
How Much Would the Tax Be If No Exemption Applies?
Kentucky transfer tax is relatively easy to estimate once you know the taxable value.
- $50,000 taxable value = about $50 transfer tax
- $100,000 taxable value = about $100 transfer tax
- $250,000 taxable value = about $250 transfer tax
- $500,000 taxable value = about $500 transfer tax
These examples use the general $0.50 per $500 rate. Recording fees and other county charges are separate.
Common Kentucky Transfer Tax Mistakes
- Assuming a quitclaim deed automatically avoids transfer tax
- Assuming a family transfer is always exempt
- Using $1.00 consideration without providing required value information
- Failing to include the correct Certificate of Consideration
- Claiming an exemption that doesn't match the actual transfer
- Forgetting to include exemption wording when transfer tax isn't being paid
- Confusing transfer tax with county recording fees
- Recording in the wrong Kentucky county
How This Fits Into the Kentucky Quitclaim Deed Process
Review transfer tax before recording. If tax is due, the county clerk will calculate and collect it before recording the deed. If an exemption applies, the deed should identify the correct exemption and the Certificate of Consideration should be consistent with the transfer.
See the main Kentucky Quitclaim Deed Instructions page for the full step-by-step process.
Kentucky Transfer Tax Exemptions FAQ
How much is Kentucky real estate transfer tax?
Kentucky real estate transfer tax is generally $0.50 for each $500 of value or fraction of $500.
Who collects Kentucky transfer tax?
The county clerk computes and collects the transfer tax before accepting a taxable deed for recording.
Can a Kentucky gift deed be exempt from transfer tax?
Some gift or nominal-consideration transfers may qualify for a Kentucky transfer tax exemption, but the deed still needs proper value and exemption information.
Where are Kentucky transfer tax exemptions listed?
Kentucky transfer tax exemptions are listed in KRS 142.050.
Is this legal advice?
No. This page provides general educational information and is not legal advice.