Fairfield County Farm Bureau will be hosting a Current Agricultural Use Value (CAUV) meeting and panel at the Fairfield County Fair this year. This is very important as CAUV for Fairfield County is up for re-evaluation this year. Come learn and ask questions about how your land is re-evaluated. It will be located at the Ed Sands/Farm Bureau Building on Monday, Oct. 10, at 3 p.m.
Jon A. Slater, Jr., Fairfield County Auditor
David J. Burgei, GISP, GIS / Real Estate Administrator
Bill Williams, CAUV Administrator
Leah Curtis, Director of Agricultural Law, Ohio Farm Bureau Federation
Don’t miss your chance to get informed so that you are not caught off guard!
Farmers who are enrolled in the Current Agricultural Use Value (CAUV) program have been seeing sharp increases in the taxable value of their land. While no less frustrating to landowners, these increases can be explained by looking at how the formula works.
What is CAUV?
CAUV was established after Ohio Farm Bureau campaigned for a constitutional amendment to have farmland taxed for its agricultural value, rather than its fair market value. The agricultural value of farmland is determined by the following equation:(Income from agricultural production – Non-land production costs)/ Capitalization rate = Current Agricultural Use Value
1. Start with gross farm income: The projected farm income for all land enrolled in CAUV is based on the soil type and data from three crops: corn, soybeans and wheat. Yield information for each of these crops starts with Farm Service Agency production data and is adjusted by the 10-year average of actual statewide yields. Prices for each crop are based on a survey of Ohio grain elevators.*
2. Subtract non-land production costs*: These costs are based on Ohio State University data and include typical farm input costs for corn, soybeans and wheat.
3. Divide by the Capitalization Rate*: This rate is based on the mortgage interest rate for a 15-year fixed rate mortgage from Farm Credit Services with 40 percent equity and 60 percent debt and is adjusted for taxes.
*When determining crop prices, production costs and the capitalization rate, the last seven years of values are used, with the highest and lowest values removed and the remaining five years averaged.
So why have CAUV land values been going up?
In recent years, the average crop prices used in CAUV calculations have generally increased at a greater rate than the corresponding production costs. This translates to a larger projected net income per acre.
At the same time, lower interest rates led to a decrease in the capitalization rate.
Simply put: A higher net income divided by a lower capitalization rate equals an increase in CAUV land values.
The rate of increase in CAUV land values does not necessarily translate to the same rate of increase in taxes owed by the landowner due to tax credits and other factors.
CAUV values remain substantially lower than the fair market value, making the program essential to farmers.