TAX TIME: Thinking about CAUV? Do you qualify?

BURTON, Ohio – When you pay your real estate taxes this year, do you want your farmland taxed at its market value, which may be $3,293 an acre?

Or do you want it taxed at its agricultural value, which may be $448?

Unless you enjoy handing your money over to the government, you’d probably rather take the agricultural value.

And Ohio landowners can do that if they meet a few requirements.

It’s called Current Agricultural Use Value, known as CAUV. Rather than taxing farmers based on the market value of their land, the state will tax them on the land’s agricultural value.

The CAUV program went into effect in the 1970s because exorbitant taxes threatened farmers’ futures.

Today that sentiment is the same and, as Geauga County Auditor Tracy Jemison says, the program could also be called “farmer preservation.”

Qualifications

These are the basic qualifications:

  • You either need to have more than 10 acres (excluding your home site), or you need to make at least $2,500 a year off whatever acreage you do have.
  • The land must be devoted exclusively to commercial ag use for the three preceding years, and remain that way for all the years you are enrolled.
  • You must pay a $25 one-time fee to enroll.
  • It only applies to the land. Fair market value is still used for your buildings and home site.
  • The deadline is always the first Monday in March, which this year is March 7.

Questions

I don’t farm my land. I lease it to other farmers. Can I qualify?

I have 18 acres and a couple cows and chickens. But I only farm part time. Can I qualify?

I have a horse and one girl boards her horse here, too. Can I qualify?

Each of these people may qualify, auditor Jemison told approximately 60 people last week at a CAUV meeting in Geauga County. But they would need a closer look.

For example, the woman with one horse and one border. She does not have 10 acres but her boarder pays more than $2,500 a year, so that qualification is met.

She’s been doing this more than three years, so that qualification is met.

But, in this case, the question is: Is her land being used to its full extent? Are there a couple acres vacant, not planted and not pastured? The idea is that all the land is being farmed as much as possible.

Each case is different, Jemison said. That’s why the auditor’s office comes out and looks at each situation separately.

See the difference

Jemison uses this example:

There are two 100-acre farms. One is in Town A, a rural area, where the land’s market value is $1,000 an acre. The other is in nearby Town B, a quickly developing area, where the land’s market value is $5,000.

Using a series of auditor’s calculations, Town A Farm would pay $1,567 in taxes, and Town B Farm would pay $9,626 in taxes.

Why the huge difference in two similar 100-acre farms? It’s simply because the land’s market value is so much higher in the second town.

But now use CAUV and base each farm’s land value on its potential agricultural use instead, which in this case is $120 an acre.

Town A Farm’s taxes are now $188 and Town B Farm’s taxes are $231.
Although Town A Farm saves $1,380 in taxes, Town B Farm’s savings is even more astounding. It would save $9,395 in taxes.

How good is your soil?

The Ohio Department of Taxation bases CAUV, or the land’s agricultural value, on soil quality.

They ask, “How much money could you make from this land for agricultural purposes?” And Ohio bases these values on the production of corn, soybeans, wheat and hay.

It doesn’t matter whether you’re using your land for apples or llamas or fish, the land value is still based on what it would be worth if you raised corn, soybeans, wheat or hay.

This value doesn’t just vary by county, it varies farm-to-farm. Ohio has come up with values for approximately 3,600 soil types across the state, so when your property is inspected, the auditor’s office will determine the value of your soil in particular.

What about you? Who qualifies for CAUV?

This list ranges from aquaculture to apiculture and field crops to flowers. Timber and animal husbandry, including horses, is there, too.

But the key word is “commercial.”

You must be doing this for a profit, not as a hobby, said Larry Gearhardt, Ohio Farm Bureau local affairs director.

If your daughter had a horse for 4-H and is now off at college and it’s just sitting out in the back pasture, that’s not commercial agriculture, he said.

You must be boarding or breeding or selling foals or something that qualifies as “commercial,” he said.

Under the radar

Don’t think you can slide by under CAUV.

Your land is inspected each year.

If the auditor’s office comes out and doesn’t see any agricultural production for a year, no questions are asked.

But if the land is left sitting a second year, you’ll have to go into the office and tell them your intentions. Has it just been too wet for you to get out and do anything? What are your reasons for letting the land sit?

If you have good reasoning for it and continue your agricultural practices the following year, you’re in good standing.

But if you leave the program, you’ll have to recoup, or repay, the tax money you’ve saved over the last three years by being enrolled in CAUV.

One last tip

Auditors may love to help everyone lower their taxes, but that isn’t possible, Gearhardt said.

They have schools watching over them and depending on those taxes, he said.

“Don’t blame them if they’re hard-nosed,” he said. “They can’t give tax breaks to everyone.”