Farmers should expect increased property taxes

Some farmers in Ohio may be in for a surprise when they receive their property tax bills and discover an increase from previous years.

Farmers in more than 40 Ohio counties are experiencing increased property values this year because of land reappraisal or triennial adjustments.

According to Ohio tax laws, each county must have a reappraisal of their property taxes every six years with an update every three years.

The agriculture land values changed from the Current Agricultural Use Valuation (CAUV) formula, which enables farmers with land devoted exclusively to commercial agriculture to pay taxes for the value of the land’s current use rather than for its larger fair market value. While the fair market value is based on home value, one acre of land for the home, outbuildings and the land area, the CUAV is based on income and productivity.

The Ohio Farm Bureau Federation (OFBF) states that CAUV values are calculated for each soil type in Ohio (approximately 3,500 soils) by a formula that relies on three crops: corn, soybeans and wheat. Even if a farmer in the CAUV program does not produce any of these crops, the formula used to calculate the values. The formula is then based on five factors:
  • Cropping patterns
  • Crop prices
  • Non-land production cost
  • Yield information
  • Capitalization rate
The calculations are made based on Farm Service Agency yields per acre for each of the crops per soil type.

According to a Wilmington News Journal article, two changes occurred in this year’s reappraisal that significantly affected the CUAV: The capitalization rate decreased as a result of decreased interest rates and crop prices increased. Prices have been increasing steadily, but the average now includes the latest three years of increased prices and dropped the oldest three years of minimal prices, causing the average to increase.

“Any of these changes would have caused the values to increase,” said former OFBF director of local affairs Larry Gearhardt. “Because they all occurred at the same time, the result is increased productivity divided by a smaller capitalization effectively doubling the impact on individual farmers.”

Each county auditor’s office has a property-record card that contains an itemization of soil types, buildings and other value factors. If farmers want to know their property’s information, these cards are available. Auditors advise that any complaints regarding discrepancies should be submitted before March 31, so that the farmer will pay only the appropriate amount of taxes.

Are you affected or do you know a farmer who is affected by increased property values? What are your thoughts about the reappraisal?

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