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Agricultural “Use Valuation” Offers Tax Relief for Certain Ohio Property Owners


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, during the three years prior to a CAUV application, must:
• consist of ten or more acres devoted exclusively to commercial agricultural use; or
• consist of less than ten acres devoted exclusively to commercial agricultural use and produce, or be expected to produce, an average 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 (the farming of algae); apiculture (beekeeping); 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.

• Biodiesel production, biomass energy production, electric or heat energy production, or biologically derived methane gas productino if the land on which the production facility is located is contiguous or part of a parcel of land under common ownership that is otherwise devoted exclusively to agricultural use, provided that at least 50 percent of the feedstock used in the production was derived from parcels of land under common ownership or leasehold.

•​ Land 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 I, as a landowner, should understand?
A: Let's say the county auditor determines that a conversion of land occurred because you failed to file an initial or renewal application or to pay the accompanying fee. If there was a good reason for your failure, you can file a complaint with the board of revision disputing the auditor's determination. If the board agrees that there was "good cause" for your failure, and you have since filed your application and paid the fee, then the board of revision may reverse the auditor's determination and consider your application to be properly filed. 

3/26/2013

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.

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Articles appearing in this column are intended to provide broad, general information about the law. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.

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