Cannot get a grip on the taxes in Kentucky (Frankfort: sales, real estate)

[GonnaRetireSoon]

Hello everyone - My wife and I are considering Ky as a retirement spot and I am trying to get a good solid picture of the tax situation there. We currently live in Wisconsin, but spent 20 years in Alabama so we have covered the span from a social and tax perspective. So here is an example of what I'd like to understand better:

Assume I live in a $350,000 house in Danville, Ky, have two vehicles valued at $40,000 each, and a $45,000 boat. What am I going to pay in real estate taxes, and personal property taxes? What is the local sales tax percentages and are there any untaxed categories (groceries, drugs, etc)?

Thanks in advance for the help?

[InLondon]

Here's a good link to answer your questions. Also, there are no taxes on groceries in KY.


Retirement Living - Taxes by State: Kansas - New Mexico

Scroll down the page to find KY.....

[pilothawk]

My retirement income will come in largest part from social security (not taxed if I read it correctly) and around $46,000/year military retirement (which will not be taxed since I retired in 1995).

If so, the only income tax I would have to pay would be on any investment money I cashed out.

Am I correct on this?

[CraigCreek]

You would have to pay state and federal tax on any dividends from your investments, savings accounts, etc. And if you cash out stock market investments, you'd need to pay capital gains taxes if you made a profit on your original investment. Tax-free municipal bonds are just that, tax-free, but are becoming harder and harder to find at a decent rate of return.

[GonnaRetireSoon]

so can you help me understand the real estate and personal property tax implications?

[CraigCreek]

Real estate (property) and vehicle taxes - license fees - are determined and billed by each county. If you find the property tax (on real estate) too high, there is usually a period of time during which you can ask that it be reevaluated. Properties are generally reassessed every few years and rarely go down in assessed value.

You may also be taxed for property associated with any business you may have - again, this is done at county level, though these taxes are sent on to Frankfort.

All these taxes can be deducted from your federal and state income taxes, however.

[tomocox]

http://www.revenue.ky.gov/NR/rdonlyr...axRateBook.pdf

I think this will pretty much cover your needs; if you need more, please let me know.

[GonnaRetireSoon]

tomocox, I see your posts on the forum pretty often and understand you are in the real estate business. Assume a buy a home in Crestwood Ky, Oldham County. The appraised (or assessed) value is $350,000. As I do the math I'm looking at a rate of (all in cents/$100 assessed value) 12.2 statewide levi, 18.44 Oldham countywide levi, 68.99 Oldham County school levi and 10 for Crestwood city levi. Overall rate is then $10.96 per $100 asessed value or 1.1% roughly. So this hypothetical $350,000 home should have a tax bill of approximately $3850. Does this seem in the ballpark? That's within a few dollars of what I pay in the "tax hell" Wisconsin where I currently live. Help me with my math. Also is there some sort of homestead exemption I am not ware of?

[Astrolion]

Why would you choose Kentucky. I had a retirement choice it would not be Kentucky. Kentucky has income taxes and Personal Property tax on vehicles (which is automatically charged when you register the vehicle) plus the other usual taxes like sales tax and such.

I moved to KY six months ago and I don't have any real understanding of what the taxes are going to be.

Anyway........From what I understand most States that tax income are also taxing Pension or Retirement income. So wouldn't it be better to go to a State that has no income tax. Seven states have no state income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Two others, New Hampshire and Tennessee, tax only dividend and interest income. Wouldn't it be better to retire in one of these ?

[Cattknap]

Originally Posted by Astrolion

Why would you choose Kentucky. I had a retirement choice it would not be Kentucky. Kentucky has income taxes and Personal Property tax on vehicles (which is automatically charged when you register the vehicle) plus the other usual taxes like sales tax and such.

I moved to KY six months ago and I don't have any real understanding of what the taxes are going to be.

Anyway........From what I understand most States that tax income are also taxing Pension or Retirement income. So wouldn't it be better to go to a State that has no income tax. Seven states have no state income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Two others, New Hampshire and Tennessee, tax only dividend and interest income. Wouldn't it be better to retire in one of these ?

You are making assumptions that aren't necessarily true. Just because a state has no state income tax does not mean that their overall taxes are any less than a state that has state income tax. You need to look at the overall tax burden and that varies....do your research.

We love Ky and find the taxes not extraordinary....but then we moved from So. California where the taxes are much more than they are here. We live a higher standard of living here than we did in So. Ca.