Kentucky Rental Portfolio Guide
What you need to know before building or growing a rental portfolio in Kentucky — property tax burden, state income tax, security-deposit rule, source-of-income law, and the metros that actually cash-flow after accounting for local taxes.
Tax burden on Kentucky rentals
Property tax
0.83%
effective rate on median home value
At 0.83% effective, the property tax burden sits in the lower half nationally (rank 23 of 51). Modest annual carrying cost keeps cash flow projections realistic on median-priced homes.
State income tax
4.00%
top marginal rate
A top marginal rate of 4.00% is low nationally. Rental income taxed at this level leaves more of each dollar of cash flow after federal tax, and 1031-deferred gains eventually pay this rate on recapture.
Security deposit rule
No statutory cap on security deposits. Landlords set the deposit at whatever the market accepts — typically one to two months' rent, sometimes more for higher-risk applicants or pets. Local ordinances may still apply.
Deposit rules change; verify current statute before drafting a lease.
Best cash-flow markets in Kentucky
Modeled monthly cash flow on a median-priced single-family purchase at 20% down, 30-year fixed, using Kentucky’s 0.83% effective property tax rate plus 25% of rent for insurance, maintenance, vacancy and management.
| Market | Median price | Median rent | Annual property tax | CF / month |
|---|---|---|---|---|
| London, KY | $153,691 | $1,115 | $1,276 | $-75 |
| Paducah, KY | $171,436 | $1,243 | $1,423 | $-85 |
| Murray, KY | $169,425 | $1,184 | $1,406 | $-117 |
| Somerset, KY | $183,897 | $1,277 | $1,526 | $-133 |
| Danville, KY | $212,690 | $1,298 | $1,765 | $-288 |
| Mount Sterling, KY | $201,258 | $1,078 | $1,670 | $-385 |
State median across the metros: $233,788 home, $1,213 rent, $-478/mo modeled cash flow.
Track your Kentucky rental portfolio
The Pro Portfolio Tracker rolls up every property in your portfolio, auto-revalues them monthly against local price data, and flags DSCR risk and equity milestones. Each Kentucky property carries the state-specific tax burden shown above through to the cash flow calculation.
Property tax rate: Tax Foundation. Security deposit rule: state statute. Verify current law before making decisions — statutes change and this page is a planning reference, not legal or tax advice.