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Rental property LLCs in Kentucky

Yes, you can hold a Kentucky rental in an LLC. You file Articles of Organization with the Secretary of State for $40, and the LLC files a $15 annual report by June 30 each year, starting the year after you form. The LLC also owes the Department of Revenue the limited liability entity tax, a $175 minimum. The Kentucky catch is local: Louisville Metro lets an individual leave small residential rentals off its occupational license tax return but says property held by an LLC doesn't qualify, and both Louisville and Covington make a new owner register its rentals again. Forming the LLC doesn't move your deed, though a deed from you to your own LLC for nominal consideration can be exempt from Kentucky's transfer tax.

Last checked 2026-10-24. General information, not legal or tax advice.

Local rental rules come first

Louisville Metro: registry and short-term rentals. The Rental Registry (Chapter 119) covers "all properties located in Louisville Metro and occupied or offered for long-term occupancy in exchange for money or any other consideration," and failing to register is "subject to a fine up to $100 per day per housing unit" (city About Rental Registry page). The FAQ lists a nonrefundable fee by zoning class, from $25 to $250, asks an entity owner to name a responsible individual, and says registrations "do not transfer with ownership," so after your deed the LLC registers as the new owner (city Rental Registry FAQ). A short-term rental (under 30 consecutive days) needs an annual registration with the Office of Planning ($250 per property), a Revenue Commission tax reporting number and, depending on zoning and whether it is the host's primary residence, a conditional use permit; fines start at $125 (city Short Term Rental page). That page's lighter path is for a host's primary residence, so ask Planning how an LLC-owned unit is treated. On lead, Public Health reported that Council changed the rules on February 27, 2025: landlords no longer have to test pre-1978 rentals proactively, tenants request inspections, and a landlord must address lead hazards that are found (Public Health April 2025 director's report).

Louisville Metro: occupational license tax. An individual whose Louisville rental income comes only from residential property, and totals under $50,000, doesn't have to report it on the Occupational License Tax return. The Revenue Commission's regulations say "Property held by an LLC does not qualify for the $50,000 exemption," and give the example of an owner with three LLCs, each holding a $15,000 rental, who must report all three (LMRC Regulations § 1.16, effective Jan. 1, 2026). The Form OL-3 instructions add that LLCs "are required to file an OL-3 return regardless of property type or annual gross receipts," and put the business-entity rate at 2.2% of net profit (tax year 2024 instructions). Short-term hosts are "deemed to be in the business of renting real property" and file net profit returns on all their rental income (LMRC Transient Room Tax page).

Lexington-Fayette. A short-term rental needs a Zoning Compliance Permit from Planning, a business license and an annual Special Fees License from the Division of Revenue, "$200 for the first unit and $100 per additional unit," plus at least $1,000,000 of liability insurance; operating unlicensed "could result in fines up to $500 a day" (city STR licensure page). Council amended the rules on December 5, 2024 and adopted rural rules in January 2025 that require a conditional-use permit and, outside special cases, a hosted rental (Engage Lexington). I found no citywide long-term rental registry on the city's Code Enforcement page. The occupational license fee is 2.25% of net profits (Division of Revenue). The Form 228 instructions treat an individual's rental property as a business activity when Fayette County rents reach $50,000 a year, say that "single member LLC's filing as sole proprietors for federal tax purposes are individuals for purposes of this test," and say any other business entity "is presumed to be in business regardless of the rental income amounts." So a default-taxed single-member LLC keeps the $50,000 test in Lexington, and in Louisville it doesn't.

Covington. No one may rent a dwelling unit "unless the owner or managing agent has first obtained" a rental dwelling license. The license is nontransferable, and a new owner must apply within 30 days after closing if any part of the property is rented, so a deed to your LLC starts that clock (Covington Code ch. 155, as reenacted by Ord. O-17-20; check for later amendments). City releases describe one license per parcel, good for three years, with an inspection, at $30 for a one-unit parcel up to $150 for 100 or more units, and fines of $250, $500 and $750 for unlicensed owners; the city also says landlords need an occupational license (city releases, 2021 and 2022). Short-term rentals have their own annual license under Chapter 127: a June 2024 release lists $500 for a new license and $250 to renew, with caps on non-host-occupied licenses.

Elsewhere in Kentucky. Rental rules are local. The Uniform Residential Landlord and Tenant Act applies only where a city, county or urban-county government has adopted it (KRS 383.500), so ask yours which landlord-tenant rules apply before the first lease, and see the lodging taxes below if you rent short-term.

What the LLC protects, and what it doesn't

Kentucky's LLC Act says no member or manager "shall be personally liable by reason of being a member, manager, employee, or agent of the limited liability company ... for a debt, obligation, or liability of the limited liability company, whether arising in contract, tort, or otherwise" (KRS 275.150(1)). Having a single member "is not a basis for setting aside the rule."

  • Guarantees still bind you. A member or manager may agree in writing to be personally obligated for the company's debts (§ 275.150(2)), and a personal guarantee you sign for a lender is your own promise.
  • Your own acts are yours. The protection "shall not affect" a member's liability for "his or her own negligence, wrongful acts, or misconduct" (§ 275.150(3)).
  • A personal creditor reaches your LLC interest, not the building. Property an LLC acquires is "the property of the limited liability company and not of the members individually" (§ 275.240(1)). A creditor holding a judgment against you personally gets a charging order, "the exclusive remedy," but a court may order a foreclosure on the charged LLC interest (§ 275.260(1), (4)). Ask a Kentucky attorney how that works for a single-member LLC.
  • It isn't insurance. The LLC still needs coverage that pays claims and defense costs.

One LLC, or one per property?

Separate LLCs keep one property's judgment away from the others, but each LLC pays its own $40 filing, $15 annual report, registered agent and limited liability entity tax, which is imposed on "every corporation and every limited liability pass-through entity doing business in Kentucky" (KRS 141.0401(2)(a)); in Louisville the LLC tax rule above applies to each one. Kentucky has no series-LLC option that I could find. The word "series" appears in the LLC Act (KRS ch. 275) only in a corporate share exchange (§ 275.500), checked across all 81 current sections on the Legislature's site. The filing act defines a "series entity" as one "authorized and enabled by its organic act and organizational filing to create series" (KRS 14A.1-070(39)), and the series provisions I found are in the statutory-trust act (KRS 386A.4-010), not the LLC Act. So separate properties means separate LLCs; ask a Kentucky attorney before relying on any series structure. More: Should you have a separate LLC for each rental property?. Other states: Tennessee · Indiana · Ohio · all state guides.

Already have an out-of-state LLC?

The simplest setup is a Kentucky LLC for Kentucky property. If you already have an LLC from another state, Kentucky says a foreign entity "shall not transact business in this Commonwealth until it obtains a certificate of authority" from the Secretary of State (KRS 14A.9-010(1)). The application is $90 (SOS fee page; KRS 14A.2-060(1)(k)) and must name a Kentucky registered agent and registered office, which has to be a street address (KRS 14A.9-030(1)(g), 14A.4-010, 14A.1-070(35)). The statute lists "Owning, without more, real or personal property" among activities that aren't transacting business, but the list "is not exhaustive" and doesn't mention leasing, so ask a Kentucky attorney whether renting out your property counts before you rely on it (§ 14A.9-010(2)(i), (3)). An unregistered foreign LLC may not maintain a court proceeding until it registers and owes a civil penalty of $2 for each day, but the missing certificate doesn't impair the validity of its acts or stop it from defending a suit (§ 14A.9-020). The statute also says its test doesn't decide which contacts "may subject a foreign entity to service of process or taxation" (§ 14A.9-010(5)), so ask a CPA about Kentucky tax separately. A registered foreign LLC files the same annual report (§ 14A.6-010(1)).

What it costs the state

  • Articles of Organization: $40 (SOS fee page; KRS 275.055(1))
  • Annual report: $15, due by June 30; the first is due the year after you form (SOS annual reports page; KRS 14A.2-060(2)(a), 14A.6-010(3))
  • Limited liability entity tax: $175 minimum when the LLC's total gross receipts or gross profits are $3 million or less, filed with the Department of Revenue by the 15th day of the fourth month after the tax year ends (Revenue LLET page; KRS 141.0401(2), (4))
  • Name reservation (optional): $15, holds the name for 120 days (SOS fee page; KRS 14A.2-060(1)(b))
  • Veteran-owned business: a veteran-owned business organized after August 1, 2018 pays no annual report fee for its first four years (KRS 14A.2-060(2)(b))
  • Change of registered agent or office: $10 (SOS fee page; KRS 14A.2-060(1)(g))
  • Reinstatement penalty after administrative dissolution: $100, plus the fee for each delinquent annual report (SOS fee page; KRS 14A.7-030(1)(g))
  • Foreign LLC certificate of authority: $90 (SOS fee page; KRS 14A.2-060(1)(k))
  • EIN: free from the IRS

Compare services: LLC services compared.

Forming the LLC, in order

  1. Pick a name that ends with "limited liability company," "limited company," "LLC" or "LC" and is distinguishable from any name of record with the Secretary of State (KRS 14A.3-010(1), (3)). Reserve it first if you want to hold it.
  2. Name a Kentucky registered agent: an individual who lives in Kentucky, or an entity qualified here, whose business address is the registered office (KRS 14A.4-010(1)). The SOS articles form wants a street address, not a P.O. box.
  3. File Articles of Organization with the Secretary of State ($40; the SOS says a business can be filed online). They state the name, the registered office and agent, the mailing address of the principal office, and whether managers or members run the LLC (KRS 275.025(1)). The LLC exists when the Secretary of State files them, unless you set a later effective date (§ 275.020(2)). Documents are usually processed the same day and can take up to three business days (SOS FAQ).
  4. Write an operating agreement. Kentucky defines it as "any agreement, written or oral, among all of the members," and for a one-member LLC it includes a writing the member signs about the LLC's affairs (KRS 275.015(21)). Put yours in writing anyway.
  5. Get an EIN and open the LLC's bank account. The SOS says to contact the Department of Revenue "to establish state tax accounts."
  6. Put the LLC's name and an address for notices in every lease; where the Uniform Residential Landlord and Tenant Act applies, a landlord must disclose in writing the name and address of the person who manages the premises and of an owner or agent for service (KRS 383.585).
  7. Register or license each rental with the city, and get the occupational license (above).

Forming the LLC doesn't move your deed

Putting your rental in the LLC takes a new deed, because title to real property an LLC acquires "shall vest in the limited liability company rather than in the members individually" (KRS 275.240(2)). Record it with the county clerk of the county where the property sits (KRS 382.110(1)).

  • The deed must carry certain details. It must refer to the source of your title (§ 382.110(2), (4)); give the grantor's and grantee's names and mailing addresses, a statement of the full consideration, and an in-care-of address for that year's property tax bill; and include a sworn, notarized certificate signed for both sides, which for a gift or nominal-consideration transfer must say it is a gift and state the estimated fair cash value (§ 382.135(1)). It must also show the name and address of the person who prepared it, signed by that person (§ 382.335(1)).
  • Recording costs $33 for up to five pages. Add $3 for each extra page, $4 for each additional reference, and a $10 reimbursement for permanent record storage (KRS 64.012(1)(a), (3)(a)).
  • The transfer tax is $0.50 per $500. It falls on the grantor, "fifty cents ($0.50) for each $500 of value or fraction thereof," and the clerk collects it before accepting the deed (KRS 142.050(2), (3)). For a deed that isn't a gift, value includes "the amount of any lien" (§ 142.050(1)(b)).
  • Two exemptions may fit a deed to your own LLC. The tax doesn't apply to a transfer between a person and an LLC for the portion that matches the transferor's proportionate interest in it, "if the transfer was for nominal consideration" (§ 142.050(7)(k)), or to a transfer "between a limited liability company and any of its members" (§ 142.050(7)(o)). A deed from you alone to an LLC you share with others is exempt under (k) only for your share. Whether a deed that takes the property subject to your mortgage counts as nominal consideration is a question for your attorney and the clerk, because a non-gift deed's value includes liens.
  • Property tax bill and homestead exemption. The deed names where the tax bill goes (above). If the home carries the homestead exemption, the owner must report a transfer of title to the property valuation administrator (KRS 132.810(2)(h)); I found no Kentucky source saying whether an LLC owner keeps the exemption, so ask the PVA before deeding a home you live in.

Have a Kentucky attorney prepare the deed.

Check the mortgage before you transfer

Federal law lets a lender enforce a due-on-sale clause, and a transfer to an LLC isn't one of the exceptions for 1–4 unit homes (12 U.S.C. § 1701j-3(d)). Fannie Mae allows a transfer to an LLC the borrower controls for loans it acquired on or after June 1, 2016 (Fannie Mae Servicing Guide D1-4.1-02). Ask your servicer in writing.

Insurance and taxes

Tell your insurer before title moves. For federal income tax, a single-member LLC is disregarded unless it elects corporate treatment (IRS). The Department of Revenue's filing guide lists a single-member LLC whose member is an individual as filing Form 725 and owing the limited liability entity tax but not corporation income tax, and a multi-member LLC as filing a pass-through entity return and also owing the LLET; returns are due the 15th day of the fourth month after the tax year ends (Revenue LLC FAQ; KRS 141.0401(4)). Revenue also says an LLC registered with the Secretary of State is "doing business" in Kentucky and must file a return for the year it registers, even if it was registered for only a short time.

  • Local occupational license taxes differ by city. Louisville and Lexington treat an LLC's rental income differently (above); ask a CPA which city's return you owe.
  • Short-term rentals owe lodging taxes. The statewide transient room tax is 1% of the rent, on top of the 6% sales tax and any local transient room tax; Airbnb and VRBO collect and remit it for participating hosts, and a stay of 30 continuous days or more is excluded (Revenue Transient Room Tax page; KRS 142.400). Louisville's total transient room tax is 8.5% (Louisville Revenue Commission).

Keeping each LLC in good standing

  • File the annual report with the Secretary of State by June 30 each year; the first is due between January 1 and June 30 of the year after you form (KRS 14A.6-010(3); SOS annual reports page). It sets out the registered agent and office, the principal office and the managers of a manager-managed LLC (§ 14A.6-010(1)); the SOS page says you also submit or confirm the names and addresses of members and managers.
  • If the report isn't filed by its due date, the Secretary of State may start administrative dissolution and dissolves the LLC if the problem isn't fixed within 60 days of notice; a dissolved LLC "shall not carry on any business except that necessary to wind up" (KRS 14A.7-010, 14A.7-020). The SOS page puts it more bluntly: domestic entities that miss June 30 "are administratively dissolved."
  • Reinstating needs a Department of Revenue certificate that all taxes owed are paid, the $100 penalty and each delinquent annual report fee (KRS 14A.7-030(1)). Revenue's good-standing letter requires all returns filed and paid since organization, so file the LLET return every year (Revenue LLC FAQ).
  • Keep the registered agent and office current; the Secretary of State may start dissolution if the LLC is without either for 60 days (KRS 14A.7-010(1)(b), (c)). A change to the principal office or registered agent can't be made on the annual report postcard; file a statement of change ($10) (SOS annual reports page).
  • File the LLET return by the 15th day of the fourth month after the tax year ends.
  • Renew city licenses on their own clocks: Louisville re-registration after an ownership change and its annual short-term rental registration, Lexington's annual Special Fees License, Covington's three-year rental license and annual short-term license.

Before you file or transfer a property

  • Attorney: the deed, the transfer-tax exemption, separate LLCs
  • Servicer: is the transfer allowed?
  • Insurance agent: named insured, coverage
  • County clerk and PVA: recording, exemption claim, homestead exemption
  • CPA: LLET, Form 725, local occupational license tax, lodging taxes
  • City: rental registry or license in the LLC's name; short-term rental permits
  • Calendar: June 30 annual report, April 15 LLET for calendar-year LLCs, city renewals

Form it with Corpus

Corpus prepares and files your Articles of Organization and includes the first year of registered-agent service. The Kentucky page shows the current price. Corpus isn't a law firm: the deed, the loan, taxes and city licenses are separate steps.

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Sources

Last checked 2026-10-24. Corpus is not a law firm and does not provide legal or tax advice.