Current Agricultural Use Valuation (CAUV)

Current Agricultural Use Valuation
(CAUV)
Larry Gearhardt
Ohio Farm Bureau
lgearhardt@ofbf.org
General Reappraisal For Real Property
General Reappraisal For Real Property
General Reappraisal For Real Property
General Reappraisal For Real Property
We’re Talking about the value of
land--Not your final tax bill
land
Factors that effect real estate taxes:
• Increase in property values
• The level of assessment
• Millage or tax rate
• Tax adjustment factor
• Special factors:
• 10% rollback
• 2 1/2 % Rollback on Homestead
• Homestead Exemption
Requirement for Qualification
Ohio Revised Code Section 5713.31
• Land totaling more than 10 acres
• Three preceding calendar years
• Devoted exclusively to commercial
agricultural use
OR
• government program
Requirement for Qualification
Ohio Revised Code Section 5713.31
• Land totaling less than 10 acres
• Three preceding calendar years
• Devoted exclusively to commercial
agricultural use
• Average yearly gross income of $2500
– Anticipated yearly gross income of $2500
OR
– government program
Requirement for Qualification
Ohio Revised Code Section 5713.31
• After three years, can allow land to lie
fallow
– No acts inconsistent with return of land to
agriculture
• Less than 25% of tract devoted to
conservation practices
– grass waterways, terraces, diversions, filter
strips,field borders, windbreaks, riparian
buffers, wetlands,ponds,
– cover crops for these purposes
What is Agricultural use ?
Ohio Revised Code Section 5713.30
Commercial animal or poultry husbandry
aquaculture
apiculture
commercial timber
timber contiguous to other qualifying land
field crops
tobacco
fruits
vegetables
nursery stock
ornamental trees
sod
flowers
Special Issues Concerning Timber
• At the beginning of CAUV, timber was
considered wasteland
• Certain events
– court cases, low tax revenue
• have increased attention to timber
Special Issues Concerning Timber
• How do you determine if timber is
commercial ?
• Even though not required by law, many
Auditors are requiring forest management
plans
– One problem - length of time to complete plan
• Opinion - may be able to prove
“commercial” timber without a forest
management plan
• Future of CAUV and timber ?
Explanation of the calculation of
Values for various soil mapping units
for Tax Year 1993
The annual current agricultural use values of land are calculated by the
capitalization of typical net income from agricultural products assuming typical
management, cropping and land use patterns, and yields for given types of soils.
The approximately 3300 map units which are the major producing soils with
slopes less than 25%.
The types of information necessary to utilize a capitalized net income approach
are as follows:
YEILD INFORMATION
CROPPING PATTERNS
CROP PRICES
NON-LAND PRODUCTION COSTS
CAPITALIZATION RATE
Factors used in Calculation
• A seven year rolling average is used, with the
highest and lowest numbers thrown out
• Based on 4 crops- corn, beans,wheat, & hay
• Yields Based on FSA Figures
• Cropping patterns same every year
– based upon slope
• Crop Price - survey of elevators
• Production Costs - from OSU farmer surveys
• Capitalization rate - biggest influence on value
Questions
Should farm program payments be
included in farm income ?
Should timber have a separate
valuation formula ?
Conversion of CAUV Land
• Failure to file renewal application
• Failure of new owner to file initial
application
• Failure to qualify as land devoted
exclusively to commercial agriculture use
• If fallow -acts inconsistent with return to
agriculture
• EFFECT - land loses CAUV status and
recoupment of preceding 3 years tax savings
Current Agricultural Use Valuation
(CAUV)
Larry Gearhardt
Ohio Farm Bureau
lgearhardt@ofbf.org