The Multi-Unit Rental Housing Capitalization Rate Range for 2026 has been set, as required by Kentucky
Revised Statute (KRS) 132.191(5)(a)1.d.
A Property Valuation Administrator (PVA) or taxpayer may determine the value of multi-unit rental housing
subject to government use restrictions using the methods specified in KRS 132.191(5). For the 2026 tax year,
when valuing such property through a capitalized annual net operating income approach, which uses actual
income and stabilized operating expenses based on the property’s actual history (when available).
The “Average Cap Rates” published in the RealtyRates.com 4th Quarter 2025 Investor Survey are as follows:
- Debt Coverage Ratio: 8.81%
- Band of Investment Technique: 8.70%
- Surveyed Rates: 8.29%
The average of these 4th-quarter 2025 cap rates is 8.60%. This figure shall be adjusted as required by KRS
132.191(5)(a)1.c.iii, by adding 50 to 150 basis points to the 8.60% average, resulting in an unloaded cap rate
range of 9.10% to 10.10% for the 2026 tax year.
Per appraisal standards established by the IAAO and generally accepted assessing practices, a loaded cap rate
should be used in the income approach when developing assessments for property tax purposes. The local
effective tax rate should be added to the unloaded cap rate.