There\u2019s a bit of good news for Ohio farmers to counter the bad news caused by COVID-19, as well as by last year\u2019s historic rain.<\/p>\n\n\n\n
In counties scheduled for property value updates in 2020\u2014about half of Ohio\u2019s 88 counties\u2014the average value of farmland enrolled in the Current Agricultural Use Value (CAUV) program should be about 40% lower than 2017\u20132019, or about $665 per acre.<\/p>\n\n\n\n
That\u2019s according to projections by researchers at The Ohio State University College of Food, Agricultural, and Environmental Sciences (CFAES).<\/p>\n\n\n\n
The same projections say that in counties due for property value updates in 2021\u2014another quarter of Ohio\u2019s counties\u2014average CAUV values should be about 25% less than 2018\u20132020, or about $760 per acre.<\/p>\n\n\n\n
The declines should mean lower property taxes, on average, for most of the farmers in those counties. <\/p>\n\n\n\n
The projections were published in a May report by postdoctoral researcher Robert Dinterman and Ani Katchova, associate professor and farm income enhancement chair, both of CFAES\u2019 Department of Agricultural, Environmental, and Development Economics.<\/p>\n\n\n\n
\u201cLess money paid in property tax will help reduce farmers\u2019 costs and allow them to keep a greater share of the revenues they bring in,\u201d Dinterman said.<\/p>\n\n\n\n
But he noted that CAUV values are \u201cnot exactly equal to the property tax someone will pay.\u201d A farm\u2019s total property tax bill, he said, also depends on how many taxing jurisdictions the land is subject to and the tax rate, or millage rate, within those jurisdictions.<\/p>\n\n\n\n
There could \u201ccertainly be a few cases where an agricultural landowner sees a large reduction in their CAUV value but has a corresponding increase in their millage rate and ends up paying the same in property taxes,\u201d Dinterman said.<\/p>\n\n\n\n
Ohio counties update their property values, including their CAUV values, every three years on a rotating basis, with about a third of the counties seeing updates every year. The new values then apply for the next three years.<\/p>\n\n\n\n
The state\u2019s CAUV program allows farmland to be taxed based on its agricultural value instead of its full market value. Enrollment in the program, which is voluntary, \u201cnormally results in a substantially lower tax bill for working farmers,\u201d an Ohio Department of Taxation website says.<\/p>\n\n\n\n
A county\u2019s CAUV values are based, roughly, on a formula using net farm income data from over the past five to seven years. More specifically, the data comes from a hypothetical farm producing soybeans, corn, and wheat during that period. <\/p>\n\n\n\n
\u201cIn a nutshell, CAUV values are high when the previous five to seven years of farm income were high. CAUV values are low when the previous five to seven years of farm income were low,\u201d Dinterman said.<\/p>\n\n\n\n
Farmers had a boom in net income from about 2010-2014, which was partly a major cause of rising CAUV values in the past, he said.<\/p>\n\n\n\n
\u201cSo now that we have been in a prolonged period of what people might consider low farm incomes, those values start to enter the CAUV formula and in turn lower their values,\u201d Dinterman said. <\/p>\n\n\n\n
\u201cClearly a farmer does not want to have low income, but a bit of good news that comes with that is that at least their tax bills will be a bit lower,\u201d he said.<\/p>\n\n\n\n
Dinterman and Katchova\u2019s report also states that based on early projections, the quarter of Ohio counties scheduled for CAUV updates in 2022 will see only a small decrease in their values, about 1%, to $880 per acre. <\/p>\n\n\n\n
That ties in with the researchers\u2019 expectation that the CAUV declines won\u2019t continue.<\/p>\n\n\n\n
\u201cWe should give a bit of a warning to farmers that the recent trend we\u2019ve seen in reduced CAUV values has plateaued,\u201d Dinterman said.<\/p>\n\n\n\n
The reason: a major legislative change to the CAUV formula\u2014related to how capitalization rates are calculated\u2014was started in 2017. The change was phased in, and 2020 marks the end of the phase-in.<\/p>\n\n\n\n
\u201cThat phase-in over 2017\u20132020 helped ease into the lowest CAUV values we\u2019ve seen since about 2012,\u201d Dinterman said. \u201cWe\u2019re likely to stay within a range of about $650\u2013$900 for average CAUV values in the foreseeable future.\u201d<\/p>\n\n\n\n
Read the report at go.osu.edu\/may2020cauv.<\/p>\n","protected":false},"excerpt":{"rendered":"
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