Ohio's Formula For Agricultural Property Tax: The Complexity Of CAUV
A Guest Column by State Senator Frank LaRose
September 16, 2014
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As the warmth of summer slowly fades into the crisp fall harvest season, Ohio’s farmers are firing up their combines for what they hope will be a good crop.  Recently, I have been contacted by individuals from the agricultural community regarding their property taxes.  The complex formula used by the Ohio Department of Taxation is known as the Current Agricultural Use Value (CAUV). This is a multifaceted issue, but whether you are a farmer or a member of the community, it is important to understand how these values are calculated.
In 1973, the CAUV was enacted by Ohio voters through an amendment to the Ohio Constitution.  This permitted qualifying agricultural land to be taxed at a value based on the farmland's current use rather than at its highest potential use. As a result, values are set well below true market values.
CAUV is determined by a combined analysis of cropping patterns, crop prices, crop yields, non-land production expenses, and interest rates.  Every three years, the formula is updated as the new information is arrived at, and the new formula affects farmers in counties during the reappraisal year.
Since 2005, values have increased.  The formula includes crop prices from the most recent seven years, eliminates the high and low prices, and averages the remaining five years to produce a stable income flow.  As seen by this formula, increased crop prices and historic low interest rates have driven up land values.  Today, agricultural land in Ohio has a much higher value than it did three to six years ago.
Despite the increase in CAUV values over the last few years, the program was created to ensure that only agricultural factors were being used to evaluate farmland.  According to the Ohio Farm Bureau, CAUV property was on average only 38 percent of market value for property taxation in 2013. Additionally, without CAUV, recent land sales would be a factor in determining the value of the farmland.  Ohio has one of the best CAUV formulas in the nation, and it continues to work as intended for Ohio farmers.
The Ohio Department of Taxation’s webpage is a good resource for additional information.  You may find an explanation and other statistics at  http://www.tax.ohio.gov/real_property/cauv.aspx.
While I believe CAUV is good and in the best interest of Ohio farmers, I recognize the concern I have heard from several of my constituents.  Please do not hesitate to contact my office with any concerns or suggestions.

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