Q.: Is there a special way agricultural land can be valued to reduce local real property taxes?
A.: While Ohio law generally requires real property (land and improvements) to be taxed by uniform rules according to its fair market value, a special rule exists for land devoted exclusively to agricultural use.  This commonly is referred to as current agricultural use value or “CAUV.”  A CAUV designation can significantly reduce the real property taxes owed by the land owner, especially if the land is in an area where housing or commercial uses are alternative uses for the land.

Q.: How do I know if my land qualifies for CAUV?
A.: To qualify, the land:
• must have been devoted exclusively to a qualified agricultural use during the three calendar years before the year in which a CAUV application is filed; and
• must consist of ten acres or more; or
• must consist of less than ten acres and produce or must be anticipated to produce yearly gross income of at least $2,500.

Q.: Does Ohio law define what kinds of uses are agricultural for purposes of CAUV?
A.: Yes.  The following are defined as qualified agricultural uses:  “commercial animal or poultry husbandry, aquaculture, apiculture, the production for a commercial purpose of timber, field crops, tobacco, fruits, vegetables, nursery stock, ornamental trees, sod, or flowers, or the growth of timber for a noncommercial purpose, if the land on which the timber is grown is contiguous to or part of a parcel of land under common ownership that is otherwise devoted exclusively to agricultural use, or were devoted to and qualified for payments or other compensation under a land retirement or conservation program under an agreement with an agency of the federal government.” 

Q.: What happens if the landowner’s cropland is idle for a time?
A.: Land may sit idle or fallow for up to one year (and even for up to three years in certain circumstances) if, during the previous three consecutive calendar years, it has been designated as land devoted exclusively to agricultural use.  Also, nothing can be done to the land that would hinder its return to agricultural production. 

Q.: Does a landowner automatically qualify for CAUV treatment?
A.: No.  The owner, including new owners, must file an initial application with the county auditor.  Renewal applications must be filed for each consecutive year to maintain CAUV status.  The county auditor may also refer to the CAUV application as “DTE Form 109”; many county auditors now have the forms available online.

Q.: What happens if the land no longer qualifies for CAUV status?
A.: If the land no longer qualifies, Ohio law requires landowners to pay an amount equal to the amount of the tax savings on the converted land during the three tax years immediately preceding the year in which the land is converted to non-agricultural use.

Q.: I’m buying land from a farmer.  Since I plan to use it for something other than farming, I understand the land will lose its CAUV status.  Might I get taxed because of this?
A.: Yes.  When you change the use of the property, CAUV “recoupment” will be triggered.  You should work with the seller to determine who should be responsible for the tax “payback” and to avoid any misunderstandings.

Q.: Are there any other consequences of CAUV that landowners should understand?
A.: Ohio imposes an estate tax on decedent’s estates when the net taxable value is over $338,333.   An estate may elect to have farm property that passes to a qualified heir valued at its agricultural use value.  In many cases, this will greatly reduce or even eliminate the Ohio estate tax that otherwise might be due.  While the estate tax provision uses the CAUV statutory definitions to determine whether the estate will qualify for a reduced valuation, this special estate tax rule is available regardless of whether the property was being taxed that way for real property tax purposes. 

1/28/2007

Law You Can Use is a weekly consumer legal information column provided by the Ohio State Bar Association.  This article was prepared by attorney David C. Barrett, Jr., who practices agricultural law and is a founding partner of Barrett, Easterday, Cunningham & Eselgroth LLP in Dublin, Ohio.