Ohio Current Agricultural Use Valuation

Ohio’s Current Agricultural Use Valuation (CAUV) law has been protecting farmers from unrealistic real estate taxes since 1975.

The amendment providing for CAUV was added to the Ohio Constitution in 1973 and landowners first benefited from the changes in 1975. At that time, the value of land at its “highest and best” use was quickly becoming the value used to figure real estate taxes. If, for instance, an appraiser determined that the “highest and best” use was a housing development or shopping mall, the taxes would be based on that land value. Since the land value for a mall or housing development is significantly higher than the value for agricultural production, the real estate taxes would be higher too. Appraised value is also determined by arms-length sales of similar property in similar locations. In some cases, high taxes threatened to force farm owners out of business, opening productive farm ground for urban development.

With CAUV, the land value depends upon capitalizing the expected net income from farming. This makes the taxation of farm real estate more fair and reasonable.

Tracts of land, 10 acres or larger, can qualify for CAUV if they are devoted exclusively to commercial agricultural use. Farms smaller than 10 acres are eligible if the average yearly gross farm income for the past three years is at least $2,500 from agricultural products.

A 1993 amendment to the law allows for tracts of land containing timber, whether grown for a commercial purpose or not, to qualify for CAUV if the tract is contiguous to, or part of a larger parcel of land that otherwise qualifies for CAUV.Landowners must apply with the county auditor between the first Monday in January and the first Monday in March each year. There is a $25 fee for new applications and no charge for renewals. On the applications, a landowner must identify the farm, furnish information on soil types, acreages of crops, pasture, woods, building sites, roads and waste.

To find the CAUV of a plot of land, the soil type is determined from a soil map. The soil productive index is used as a reference and as one factor in determining the value of that particular soil. The soil type takes into consideration problems or hazards due to slope, erosion, drainage or flooding on that particular farm. Crop yields are estimated based on the soil characteristics.Ohio CAUV Formula

Five-year average prices are applied to these yields to get the average gross income for the farm. After a five-year average of all costs except land rent, taxes and interest are deducted from the gross receipts, the net return is divided by a capitalization rate. This gives the land’s CAUV. The market value of buildings and building sites is added to get the total appraised value for the farm. The level of assessment is 35 percent of the appraised value. (See formulas.)

Reappraisal of real property for tax purposes is done every six years. An appraisal is updated three years following reappraisal or at any time the auditor finds that property has changed in value.

If land is converted to non-agricultural use, the auditor is required to recoup the tax savings for the three previous years. Owners must also pay recoupment if they fail to reapply for CAUV tax appraisal.

If the land is sold, the new owner has to apply for CAUV or pay the recoupment. Most often, the person who converts the land from agriculture use has the responsibility for paying the recoupment, although the law is not clear on this point.

This article is available as a PDF for download.

Stark County Farm Bureau Legal Information SeriesThis article is meant to be an educational tool and should not be perceived as legal advice. If you feel that you need more information regarding CAUV, please contact the other resources below.

Other Ohio CAUV Resources:

For more information you can contact your local county auditor. To find his/her contact information go to www.caao.org/DIRECTORY and select the county where your property is located.

For more information on the CAUV tax, check out the Department of Taxes informational handout at:
tax.ohio.gov/divisions/communications/publications/documents/real_property_tax.pdf

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