KRS 132.195 — Assessment of possessory interest in tax-exempt real or personal property -- Lessee's liability

(1) When any real or personal property which is exempt from taxation is leased or
possession is otherwise transferred to a natural person, associatio n, partnership, or
corporation in connection with a business conducted for profit, the leasehold or
other interest in the property shall be subject to state and local taxation at the rate
applicable to real or personal property levied by each taxing jurisdiction.
(2) Subsection (1) of this section shall not apply to interests in:
(a) Industrial buildings, as defined under KRS 103.200, owned and financed by a
tax-exempt governmental unit or tax -exempt statutory authority under the
provisions of KRS Chapter 1 03, the taxation of which is provided for under
the provisions of KRS 132.020 and 132.200;
(b) Federal property for which payments are made in lieu of taxes in amounts
equivalent to taxes which might otherwise be lawfully assessed;
(c) Property of any state-supported educational institution;
(d) Vending stand locations and facilities operated by blind persons under the
auspices of the Division of Kentucky Business Enterprise, regardless of
whether the property is owned by the federal, state, or a local government;
(e) Property of any free public library;
(f) Property in Fayette County, Kentucky, administered by the Department of
Military Affairs, Bluegrass Station Division;
(g) All privately owned leasehold interests in residential property when the
residential property is owned in fee simple by a purely public charity as of
July 1, 2020:
1. When the real property includes a residential property unit that is:
a. Leased by the purely public charity for a period of at least one (1)
year to an individual person who is fifty -five (55) years of age or
older;
b. Maintained as the individual person's permanent residence under a
lease agreement that:
i. Prohibits the lessee from subleasing the unit; and
ii. Provides that the lessee's possessory interest in the unit is
terminable by the lessor upon the death of the lessee, the
physical or mental inability of the lessee to continue to reside
in the unit, or the lessee's relocation to a nursing home or
similar assisted living facility; and
c. Constructed on or before July 1, 2020, or constructed after July 1,
2020, on land that was privately owned in fee simple by the purely
public charity on or before July 1, 2020;
2. If the fee simple ownership is transferred b y the purely public charity
after July 1, 2020, it shall be transferred to another purely public charity
and the requirements established for the residential property unit in
subparagraph 1. of this paragraph shall be maintained; and
3. The taxation of whi ch is provided for under KRS 132.020 and 132.200;
or
(h) All privately owned leasehold interests in residential property owned in fee
simple by a purely public charity, which is exempt from ad valorem taxation
under Kentucky Constitution Section 170, when the residential property unit
is leased by the purely public charity to an individual person who is:
1. Receiving medical or educational supportive services from the purely
public charity; and
2. a. A postsecondary educational participant;
b. A minor;
c. Sick, disabled, or impoverished; or
d. Over the age of sixty-five (65).
(3) Taxes shall be assessed to lessees of exempt real or personal property and collected
in the same manner as taxes assessed to owners of other real or personal property,
except that taxes due under this section shall not become a lien against the property.
When due, such taxes shall constitute a debt due from the lessee to the state, county,
school district, special district, or urban -county government for which the taxes
were assessed and if unpaid shall be recoverable by the state as provided in KRS
Chapter 134.