CAUV Agricultural Usage
CURRENT AGRICULTURAL USE VALUE (CAUV)
INFORMATION FOR HANCOCK COUNTY RESIDENTS
For more information on CAUV - please visit the Department of Taxation website: http://www.tax.ohio.gov/real_property/cauv.aspx
The Current Agricultural Use Value program was implemented within the State of Ohio to save open spaces and to permit the valuing of farmland on its ability to produce income rather than market value.
The CAUV law can provide significant tax-savings benefits to those involved in agricultural production if qualifications are met.
This document attempts to answer key questions regarding this program. Additional information may be obtained from the Auditor's Office either in person, or by calling 424-7820.
WHAT IS THE CURRENT AGRICULTURAL USE VALUE LAW?
This law is an outgrowth of the Constitutional Amendment passed by the voters of the State of Ohio to save Open spaces, and to protect the farmer from paying unnecessarily high property taxes for farmland.
WHAT ARE THE ELIGIBILITY REQUIREMENTS?
- Any tract of commercial agricultural land of 10-tillable acres or more which has been in agricultural use for the last three years is eligible. A smaller tract may be included under this section if the tract produced an average gross income of $2,500 or more from sales of agricultural products during the previous three years or if there is an expected gross income of such amount.
- Must be land devoted exclusive to commercial agricultural use.
WHERE SHOULD THE APPLICATION BE FILED?
All applications are to be filed with the Hancock County Auditor’s Office. There are trained personnel ready to assist individuals in completing the CAUV applications.
IS THERE A COST TO FILING?
Yes there is. The State Legislature has mandated a $25.00 per application initial filing fee. This fee stays in the County Real Estate Assessment Fund for use in financing the program. There is no charge for annual renewal.
FOR WHAT LENGTH OF TIME IS THE APPLICATION EFFECTIVE?
The CAUV application must be filed each year. Hancock County has devised a very simplified renewal procedure requiring only a simple form notification from year to year.
WHAT HAPPENS IF THE RENEWAL APPLICATIONS ARE NOT RETURNED?
If the renewal application for Current Agricultural Use Valuation is not returned, then the Auditor is required to value the property at its true market or current market value and to recoup the taxes for the current tax year and the three years immediately preceding.
WHEN DOES THE PARCEL OF PROPERTY BECOME SUBJECT TO RECOUPMENT?
There are two general causes for recoupment. First, the failure to return the Current Agricultural Use Value renewal application, and second, if a change in use in the parcel occurs, so that the land is not used exclusively for commercial agricultural purposes. At that point, the Auditor will notify the owner and recalculate the taxes.
WHAT HAPPENS WHEN THE LAND IS CONVERTED FROM AGRICULTURAL USE?
As noted in Section 5713.34 of the Ohio Revised Code, "Upon the conversion of all or any portion of a tract, lot, or parcel of land devoted exclusively to agricultural use a portion of the tax savings upon such converted land shall be recouped as provided for by Section 36, Article II, Ohio Constitution by levying a charge on such land in 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 conversion occurs. The charge shall constitute a lien of the state upon such converted land as of the first day of January of the tax year in which the charge is levied and shall continue until discharged as provided by law."
HOW MUCH IN TERMS OF TAX REDUCTION MIGHT BE EXPECTED?
The actual reductions are dependent on the Current Agricultural Use Value (CAUV) which is placed upon the land. Major factors affecting the value are soil type, soil region and land capability class. Agricultural commodity prices and production costs also enter into the CAUV value. The resulting CAUV value replaces the appraised value and the tax value is set at 35 percent of the CAUV value. The CAUV values are readjusted on a three-year cycle by the State Tax Commission to account for changing agricultural production costs and commodity prices.
WHEN IS THE FILING PERIOD FOR CAUV?
At any time after the first Monday in January and prior to the first Monday in March of any year.
HOW DOES THE CAUV APPRAISAL DIFFER FROM THE FAIR MARKET VALUE?
The fair market value normally depends upon establishing the value for the farm based on comparing it to recent sales of similarly situated farms. The CAUV system depends upon capitalizing the expected net income received from farming.
WHAT ARE SOME OF THE MAJOR ADVANTAGES OF THE CAUV PROGRAM?
- Provides tax relief on agricultural land that is 10-tillable acres or more or has a gross annual income of at least $2500.
- If the qualifying tract of land contains woodland as well as cropland, the CAUV Law will often provide a greater tax relief than the Ohio Forest Tax Law because that law applies only to forest land acreage.
WHAT ARE SOME OF THE DISADVANTAGES?
- Owner MUST renew applications annually.
- There is a recoupment penalty equal to the tax savings for the past three years if land use changes to non-agricultural use or there is a failure to return the renewal application.
- Tracts under 10-tillable acres do not qualify unless gross annual income from sales of agricultural products are $2,500 or more