Farming in Ohio has plenty of challenges. There is always the weather, where springtime flooding, a broiling summer drought or a late-season hail storm can leave a framer with little to show for a year’s toil. There are commodity price fluctuations that may be influenced by a bad crop in Russia or economic instability in Asia.
Farming is such a volatile enterprise that even programs or policies that typically benefit farmers can hurt under the right circumstances. Right now is one of those circumstances for Ohio farmers. Property tax valuations on Ohio farm property have driven taxes to unprecedented increases. Between 2008 and 2014, these taxes increased 294 percent.
The valuation of farmland is different from other property in Ohio. Instead of using the market value, the state employs the Current Agricultural Use Value (CAUV) formula. This formula uses five factors that generate a tax rate that typically is far less than what would occur if the market value of the land were used, and protects farmers from being priced off their land by pressure from real estate development.
However, because commodity prices peaked a few years ago, this has led to painful increases for some farmers. Legislators are looking at modifications to make these increases less damaging, but for many, the sting may still be sharp.
For farmers, working with tax professionals may allow planning during times when prices are high to accurately project what future tax burdens may be. Taxes, especially for farmers and their volatile occupation, can be unpleasant, but knowledge and planning can help to minimize the long-term effect on your farm and business.
Source: indeonline.com, “Taxes hit farmers hard,” Christina McCune, April 11, 2016