Taxes are never simple. Even otherwise straightforward taxes, like the Ohio state sales tax can vary, as some municipalities add a local sales tax that increases tax rate.
For something like property tax, it can become a significantly more complex matter, especially if it concerns agricultural land. Because, unlike residential real estate, agricultural land’s property tax rate is not based simply on the market value of the land. In Ohio, property tax on agricultural land is based on the current agricultural use value (CAUV).
While many taxpayers complain as the market value of their real estate increases and triggers reassessments of their tax, for owner of agriculture land, instead of a gradual increase over time, their CAUV can be quite volatile, because part of the calculation is based on the value of the crops produced on the land.
Some landowners have seen increases of 400 percent this year, which was caused in part by the high crop prices of last few years. Ironically, farmers are receiving these tax statements at the same time as crop prices are collapsing.
Fortunately, the CAUV is based on an average of five years of prices over a seven-year period, which also discounts the high and low years in an attempt to even out the tax burden.
Farmers near cities like Toledo benefit, as the CAUV lessens the effect of high urban land prices, which could drive their taxes up and force them to sell.
With effective tax counsel, owners of agricultural land can plan for the fluctuations and if a valuation seems unrealistic, can request a reassessment.
Cantonrep.com, “Ohio farmers see big jump in property taxes,” Mark Gillespie, The Associated Press, November 8, 2014