Kentucky Commercial Real Estate Loans: Transfer Tax & PACE
What changes for a commercial property loan in Kentucky: the $0.50-per-$500 transfer tax, court-ordered foreclosure sales, the two-thirds redemption rule and PACE.
| What | Kentucky |
|---|---|
| Real estate transfer tax | $0.50 for each $500 of value or fraction of $500, imposed on the grantor named in the deed. For a sale, value is the full actual consideration paid or to be paid, including any liens on the property. The county clerk collects it when the deed is offered for recording, once per transaction. [1] |
| Foreclosure: court-ordered sale and appraisal | A court can order real property sold in an action to enforce a lien. Before a court-ordered sale, the commissioner or other officer selling the property has it appraised under oath by two disinterested householders of the county; the written appraisal is filed in the case before the sale. [2] |
| Right of redemption | If a court-ordered sale does not bring two-thirds of the appraised value, the defendant may redeem the property within 6 months from the sale by paying the purchase price plus 10% annual interest and the purchaser’s reasonable upkeep costs. The period was one year until 2014 Senate Bill 36. [3] |
| PACE law (Energy Project Assessment Districts) | House Bill 100 (2015) lets local governments create energy project assessment districts (EPADs) that finance energy projects through assessments on participating properties only (KRS 65.205–65.209). Residential property with fewer than five units is excluded. [4] |
| Mortgage lender consent for PACE | A local government may impose an EPAD assessment only after the owner of record files a petition and signs a written contract with it. The petition must include the written consent of the holder of each existing mortgage lien on the property, stating that it does not object to the assessment. [5] |
Checked 2026-10-18; sources are listed at the end of the page. Rates and rules change — your title company and closing attorney confirm the figures for a specific deal.
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Commercial property loans in Kentucky use the same programs as every other state — SBA 504, DSCR loans, bridge loans, bank and life-company permanent loans. What Kentucky changes is a short list: a low transfer tax that the statute puts on the seller, court-ordered foreclosure sales after a sworn appraisal, a six-month redemption right when the sale price falls below two-thirds of that appraisal, and PACE financing that needs your mortgage lender's written consent.
Transfer tax: $0.50 per $500, on the grantor
Kentucky taxes the deed at $0.50 for each $500 of value or fraction of $500. The statute imposes it on the grantor — the seller — and for a sale the value is the full price paid or to be paid, including any liens on the property. The county clerk collects it when the deed is offered for recording.
Example: a $2,000,000 commercial building bought with a $1,400,000 loan. $2,000,000 is 4,000 units of $500, and 4,000 × $0.50 = $2,000.
The tax follows the deed's value, so the $1,400,000 loan doesn't change it. The same example costs $0 in transfer tax in neighboring Missouri and $9,007.70 in Tennessee, where both the deed and the loan are taxed. The statute names the seller, but the purchase agreement can still shift costs — read the closing-cost section before you sign it.
Foreclosure: lien enforcement and a court-ordered sale
A Kentucky lender can enforce a mortgage through a lawsuit to enforce the lien, and in that action the court can order the property sold. Before a court-ordered sale, the commissioner or other officer selling the property has it appraised under oath by two disinterested householders of the county. If they disagree, the officer acts as umpire, and the written appraisal is filed in the case before the sale.
That appraisal matters to both sides: it is the number the redemption rule below is measured against. If a sale or refinance is your way out of a troubled loan, start at the first missed payment, and use DSCR to see how far income has fallen short.
The two-thirds redemption rule
If a court-ordered sale does not bring two-thirds of the appraised value, the owner may redeem the property within six months from the sale. Redeeming means paying the purchase price plus 10% annual interest, and the purchaser's reasonable costs of keeping the property up after the sale. The window was one year until 2014 Senate Bill 36 cut it to six months.
Example: the court's appraisers value the building at $2,000,000. Two-thirds of that is $1,333,333.33. A sale at $1,300,000 falls below the line, so the owner can redeem within six months; a sale at $1,350,000 does not, and there is no statutory redemption. A buyer at a Kentucky foreclosure sale — or a lender taking the property back — should know which side of that line the bid lands on. If you signed a personal guarantee, any shortfall after the sale is a separate question for your loan documents and your attorney.
PACE: energy project assessment districts
Kentucky's PACE law came from House Bill 100 in 2015 (KRS 65.205–65.209). A city or county can create an energy project assessment district (EPAD), and the energy project is repaid through an assessment on the participating property only. Residential property with fewer than five units is outside the program, so it is aimed at commercial, industrial and larger multifamily buildings.
The statute puts the existing lender in the room: the assessment can be imposed only after the owner files a petition and signs a contract with the local government, and the petition must include the written consent of each existing mortgage lien holder. Programs are local. Louisville Metro adopted its EPAD ordinance in April 2016 (Ordinance 57-2016) and designated all of Louisville Metro as the district; since 2021 Louisville Metro has also offered administration through Energize Kentucky. Check first that your county or city has a district, then raise PACE with your lender before you sign the loan. C-PACE Desk, a BestLoanUSA site, tracks Kentucky's C-PACE status.
Where to start
Choose the program — SBA 504 for an owner-occupied building, a DSCR loan or permanent loan for an income property, a bridge loan for a transition — and put the transfer tax in the closing budget. Size the loan with the commercial mortgage calculator. For financing that isn't tied to real estate, the Kentucky business loan guide covers SBA offices and state programs.
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Sources: Ky. Rev. Stat. § 142.050; Ky. Rev. Stat. § 426.005 and Newman v. Estate of Hobbic, 539 S.W.3d 697 (Ky. 2018); Ky. Rev. Stat. § 426.520; Ky. Rev. Stat. § 426.530 and 2014 Senate Bill 36; 2015 House Bill 100 (KRS 65.205–65.209); Ky. Rev. Stat. § 65.207; Louisville Metro Government, EPAD program announcements (2016, 2021). Checked 2026-10-18.
The bottom line
Kentucky’s transfer tax is low — $0.50 per $500, or $2,000 on a $2,000,000 building — and it falls on the seller under the statute. The bigger Kentucky-specific terms sit on the default side: a court-ordered foreclosure sale follows a sworn appraisal, and a sale below two-thirds of that appraisal gives the owner six months to redeem. If you plan PACE financing, get your mortgage lender’s written consent early; the statute won’t let the assessment go on without it.
Commercial loan rates and terms in Kentucky
Rates and leverage come from the lender, the property and the borrower, so they are the same national ranges in Kentucky as elsewhere — what changes here are the closing costs and rules in the table above. Typical terms as of September 2026:
| Program | Rate | Max LTV / LTC | Term |
|---|---|---|---|
| Bank / credit union | 6.5–8% | 65–75% (80% multifamily) | 5–10 yr |
| SBA 504 | 6.25–7.25% | Up to 90% | 10–25 yr |
| SBA 7(a) | 8.5–11.5% | Up to 90% | Up to 25 yr |
| DSCR | 6.75–8.75% | Up to 75–80% | 5–30 yr |
| CMBS | 7–8% | Up to 75% | 5–10 yr |
| Bridge | 6.25–8.25% | 65–80% | 12–36 mo |
| Construction | 6.75–10.5% | 65–80% LTC | 12–24 mo |
How each range is built: commercial real estate loan rates by type.
Kentucky commercial real estate loan FAQ
What are commercial mortgage rates in Kentucky?
Commercial lenders price a loan on the property and the borrower rather than the state, so Kentucky rates follow national ranges: about 6.5–8% for a bank loan, 6.25–7.25% for SBA 504, 6.75–8.75% for a DSCR loan and 6.25–8.25% for a bank or debt-fund bridge loan (benchmarks as of September 2026).
How much down payment do I need for a commercial property in Kentucky?
Typically 25–35% for a bank loan and 20–25% for a DSCR loan. An owner-occupied building can qualify for SBA 504 with 10% down (15% for a business under two years old or a special-purpose building, 20% if both).
How much is Kentucky’s transfer tax on a commercial property sale?
$0.50 for each $500 of value, charged to the seller (the grantor) when the deed is recorded. On a $2,000,000 building that is $2,000.
Does a Kentucky commercial foreclosure go through court?
A lender can sue to enforce the mortgage lien, and the court can order the property sold. Before a sale, the property is appraised under oath by two disinterested householders of the county, and the appraisal is filed in the case. That appraisal later decides whether the owner can redeem.
Can the owner get the property back after a Kentucky foreclosure sale?
Only if the sale brought less than two-thirds of the appraised value. Then the owner has 6 months from the sale to redeem by paying the sale price plus 10% annual interest and the buyer’s reasonable upkeep costs.
Sources
- Ky. Rev. Stat. § 142.050
- Ky. Rev. Stat. § 426.520 (court-ordered sales; § 426.005 lien-enforcement sales)
- Ky. Rev. Stat. § 426.530
- Kentucky General Assembly — 2015 House Bill 100
- Ky. Rev. Stat. § 65.207
Checked 2026-10-18.
Run the numbers
- DSCR Calculator Calculate your Debt Service Coverage Ratio instantly. See if your property qualifies for CRE financing and which loan programs are available to you.
- SBA 504 Loan Calculator Estimate your SBA 504 loan structure — see the three-part split (borrower, CDC, bank), monthly payments for each portion, and total project financing.
- Refinance Break-Even Calculator Find out exactly how many months until your refinancing savings cover the closing costs. Make a data-driven decision on whether to refinance your CRE loan.
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- Colorado Commercial Real Estate Loans: Public Trustee & C-PACE What changes for a commercial property loan in Colorado: a 0.01% deed fee and no mortgage tax, public trustee foreclosure with a court order, statewide C-PACE.
- Connecticut Commercial Real Estate Loans: Taxes & C-PACE What changes for a commercial property loan in Connecticut: the conveyance tax, entity transfers, court-run strict foreclosure and the Green Bank’s C-PACE.