Category Archives: Tax

Ohio Legislature May Reconsider CAUV Bill

Written by:  Chris Hogan, Law Fellow, OSU Agricultural & Resource Law Program

The Ohio Legislature is once again considering a bill regarding Ohio’s current agricultural use valuation (CAUV) program. CAUV permits land to be valued at its agricultural value rather than the land’s market or “highest and best use” value. Senator Cliff Hite (R-Findlay) introduced SB 36 on February 7, 2017. The bill would alter the capitalization rate used to calculate agricultural land value and the valuation of land used for conservation practices or programs. The bill has yet to be assigned to a committee.

The content of SB 36 closely mirrors the language of a bill meant to address CAUV from the last legislative session: SB 246. Introduced during the 131st General Assembly, SB 246 failed to pass into law. SB 246 proposed alterations to the CAUV formula which are identical to those proposed by the current bill: SB 36. According to the Ohio Legislative Service Commission’s report on SB 246, the bill would have proposed changes that would have led to a “downward effect on the taxable value of CAUV farmland.” The likely effect for Ohio farmers enrolled in CAUV would have been a lower tax bill.

Due to the similarity between the two bills, the potential impacts of SB 36 on the CAUV program will likely be comparable to those of the previous bill. The proposed adjustment of the capitalization rate is likely to reduce the tax bill for farmers enrolled in CAUV. More specifically, the bill proposes several changes to the CAUV formula:

  • States additional factors to include in the rules that prescribe CAUV calculation methods. Currently, the rules must consider the productivity of the soil under normal management practices, the average price patterns of the crops and products produced to determine the income potential to be capitalized and the market value of the land for agricultural use. The proposed legislation adds two new factors: typical cropping and land use patterns and typical production costs.
  • Clarifies that when determining the capitalization rate used in the CAUV formula, the tax commissioner cannot use a method that includes the buildup of equity or appreciation.
  • Requires the tax commissioner to add a tax additur to the overall capitalization rate, and that the sum of the capitalization rate and tax additur “shall represent as nearly as possible the rate of return a prudent investor would expect from an average or typical farm in this state considering only agricultural factors.”
  • Requires the commissioner to annually determine the overall capitalization rate, tax additur, agricultural land capitalization rate and the individual components used in computing those amounts and to publish the amounts with the annual publication of the per-acre agricultural use values for each soil type.

To remove disincentives for landowners who engage in conservation practices yet pay CAUV taxes at the same rate as if the land was in production, the proposed legislation:

  • Requires that the land in conservation practices or devoted to a land retirement or conservation program as of the first day of a tax year be valued at the lowest valued of all soil types listed in the tax commissioner’s annual publication of per-acre agricultural use values for each soil type in the state.
  • Provides for recalculation of the CAUV rate if the land ceases to be used for conservation within three years of its original certification for the reduced rate, and requires the auditor to levy a charge for the difference on the landowner who ceased the conservation practice or participation in the conservation program.

To read SB 36, visit this page. For more information on previous CAUV bills, see our previous blog post.

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Ohio Creates New “Farm Winery” Liquor Permit

Governor Kasich has signed legislation to create a new “Ohio Farm Winery Liquor Permit.” To read this post, visit our new blog site at http://aglaw.osu.edu.

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Filed under Business and Financial, Tax, Uncategorized

Ohio Legislature Passes Agritourism Legislation

An agritourism bill first introduced over a year ago has finally received approval from the Ohio General Assembly. Visit our new blog site here to read this post.

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Filed under Tax, Uncategorized, Zoning

Legislation Proposes Tax Credits for Manure Infrastructure Investments

A legislative proposal to address manure infrastructure costs introduced by Rep. Brian Hill (R-Zanesville) is moving once again, receiving its third hearing before the House Ways and Means Committee on Tuesday, April 26.  To continue reading this post, go to our new blog site, here.

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Filed under Animals, Environmental, Tax, Uncategorized

CAUV Bills Awaiting Committee Action

Legislation proposing changes to Ohio’s current agricultural use valuation (CAUV) program has remained on hold in the General Assembly since last fall.  To read this post, visit our new blog site at aglaw.osu.edu/blog.

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Ohio Supreme Court Resolves Grain Bin Taxation Issue

Grain bins are “business fixtures” that are personal property and not subject to real property tax, according to a decision issued today by the Ohio Supreme Court.  Continue reading.

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Leasing, Conditional Sales Agreements, and the Future of Section 179

Author: Larry R. Gearhardt, OSU Extension Field Specialist in Taxation

Generally, a taxpayer that buys business or income-producing property (not held for sale) with a useful life of more than one year cannot deduct its full cost as an expense for that year. To read this post, go to our new blog website, http://aglaw.osu.edu/blog.

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