Were all Kentucky real estate transfers to the federal government exempt from transfer tax?

Plain-English summary

In 1993, Kentucky's Attorney General resolved conflicting earlier opinions about the real estate transfer tax. The AG read KRS 142.050(7) to exempt a deed to the United States or another listed government only when it was a gift or involved nominal consideration. It rejected the earlier view that every transfer to a government escaped the tax.

The opinion expressly overruled OAG 74-508 and OAG 78-798, which had stated the broader exemption, and affirmed OAG 77-152 and OAG 78-748, which had read the limitation into transfers to government. Its reasoning depended on the placement of the phrase “in the event of a deed of gift or a deed with nominal consideration” after the word “to.”

Currency note

This opinion was issued in 1993. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Historical summary

Property owners conveying land to government

At the time, the AG said a deed to a listed governmental unit was exempt under the cited provision only if the transfer was a gift or for nominal consideration. A transfer for more than nominal consideration did not qualify simply because the recipient was the federal government.

County clerks and deed preparers

The opinion supplied the office's controlling 1993 interpretation of the quoted exemption and identified which of its earlier opinions it overruled. It distinguished the statute's language for transfers to government from its separate language for transfers from government.

Common questions

Was a sale of Kentucky land to the federal government always exempt from transfer tax?

The AG said no. Under its 1993 reading, a deed to the government needed to be a gift or involve nominal consideration to fit the cited exemption.

Which prior Attorney General opinions did OAG 93-73 overrule?

It overruled OAG 74-508 and OAG 78-798, which had treated all transfers to and from governmental units as exempt. It affirmed OAG 77-152 and OAG 78-748.

Did the gift-or-nominal-consideration limit apply to deeds from government?

The AG's textual analysis placed that limit on transfers to a governmental unit. The quoted statute separately described transfers from the listed governments; this opinion's question and holding centered on deeds to them.

Background and statutory framework

John J. Chewning asked whether every transfer to the federal government was exempt under KRS 142.050. The AG compared four conflicting office opinions and read the grammar of subsection (7)(b). It concluded the qualifying phrase modified “to,” rejecting the two opinions that had overlooked that limit.

Citations and references

• KRS 142.050(7): transfer-tax exemption text quoted by the AG.
• OAG 74-508 and OAG 78-798: expressly overruled.
• OAG 77-152 and OAG 78-748: expressly affirmed.

Source

• Landing page: https://www.ag.ky.gov/Resources/Opinions/Opinions/OAG93-073.htm

Original opinion text

OAG 93-73

October 27, 1993

John J. Chewning

P.O. Box 573

Hopkinsville, Kentucky 42241

Dear Mr. Chewning:

You have asked if all transfers to the federal government are exempt from the real estate transfer tax in KRS 142.050.

Our opinions are in conflict on this question. In OAG 74-508 and OAG 78-798, we said that all transfers to and from a governmental unit are exempt from the tax. In OAG 77-152 and OAG 78-748, we said that transfers to a governmental unit are exempt only if the transfer is a gift or there is only nominal consideration. None of these opinions references any of the others.

The statute in question, KRS 142.050(7), says:

The tax imposed by this section shall not apply to a transfer of title:

. . .

(b) To, in the event of a deed of gift or a 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[.]

OAG 74-508 and OAG 78-798 give perfunctory treatment to the question, cite no authorities, and offer no substantive analysis. They also reflect an apparent misunderstanding of the plain terms of the statute. In contrast, OAG 77-152 and OAG 78-748 provide substantial analysis and cite numerous authorities in support of the conclusion reached. They are also consistent with a common sense reading of the statute. We have no hesitation in stating that the phrase “in the event of a deed of gift or a deed with nominal consideration” modifies the word “to,” so that conveyances to a governmental unit are exempt only if they involve a gift or a merely nominal consideration.

OAG 74-508 and OAG 78-798 are overruled, and OAG 77-152 and OAG 78-748 are affirmed.

Sincerely,

Chris Gorman

Attorney General

Ross T. Carter

Assistant Attorney General