The value of a one-acre home site, plus the value of all buildings on the property, is calculated based on current market value. This value is then added to the agricultural use value of the land which is enrolled in the CAUV program. This combined number is the total appraised value for the property.
If the Current Agricultural Use Valuation isn’t refiled, the use changes to non-agricultural. If the land doesn’t meet the income requirements, then the Auditor is required to value the property at its current market value, to recoup the taxes for the current tax year and for two years in the past.
In 1972, Ohio voters approved a constitutional amendment that allowed qualified agricultural land to be valued at its current agricultural use value for real property tax purposes rather than fair market value. The objective of the CAUV program has been to discourage the sale of farmland for development purposes by providing the farmer with a tax break that in theory counteracts some of the lure of profit from a sale of the property. The dwelling, home site and outbuildings are still valued at fair market value.
Current agricultural use value can be determined by the capitalization of the typical net income from agricultural crops on a given parcel of land assuming typical management, cropping patterns, and yields for the types of soil present on the tract. In almost all cases the valuation technique afforded by the CAUV program produces a taxable value for qualified agricultural land which is lower than what it would be if the same land were appraised for fair market value.
The Ohio Department of Taxation calculates CAUV rates and sends the values to the County Auditors in each county. The State of Ohio uses several criteria in calculating CAUV land values including yield information, cropping patterns, crop prices, non-land production costs, and the capitalization rate. CAUV rates are updated every three years and current rates were updated with the 2013 revaluation.
The previous CAUV values were some of the lowest in CAUV history. Beginning in 2000, CAUV values decreased at an unprecedented rate. 2005 represented the bottom when the average soil types in Ohio were $123/acre. CAUV values are now trending upward. Because of the low values, it didn’t take much of an actual increase to cause increases of over 300%. Since crop yields increased over the last 3 years, the State has adjusted values to reflect a more accurate rate. Farm Service Agency had not adjusted its crop yields since 1984, again causing a large increase. Another factor was the capitalization rate decreasing. The capitalization rate is used to convert income streams into an indication of overall value. This rate is a somewhat complicated variable that is arrived at by taking several factors into account. Lower capitalization rates mean higher land value.
The County Auditor has no authority to adjust CAUV values. Because the State Tax Commissioner directs the County Auditor to use current CAUV rates, the County Auditor is not permitted to make any adjustment to these values.
The current CAUV formulas are the same formulas that gave us the lowest values in CAUV history in 2005. The purpose of the CAUV program is not to guarantee the lowest values for landowners, but rather to accurately reflect what is happening in the farming community. In addition, rural landowners have become accustomed to the low values. Even with the significantly increased CAUV values, CAUV landowners are still paying taxes lower than what the rate would otherwise be.
Tax bills reflect those who are currently receiving the CAUV savings. Every January a renewal form is mailed out to landowners currently enrolled in the in the CAUV program. Please be aware that this form MUST be returned prior to the first Monday in March each year to continue with the CAUV program in addition to meeting State guidelines. If an annual CAUV renewal form is not filed with the County Auditor, the land will be taken out of the CAUV program and recoupment charges will be added to the tax bill per State requirements