While high corn and soybean prices, increasing land values and growing incomes mean good economic times for grain farmers, the very factors raising farm income eventually will increase farm property taxes, according to Purdue University agricultural economist Larry DeBoer.
"Farmland prices are rising, but that's not the reason property taxes will rise - at least not directly," DeBoer said. "Farmland is the one major type of property that is not assessed for tax purposes based on predicted selling prices, or market value."
Instead, farmland is assessed by a formula that starts with a base rate, or dollar value per acre, set by the Department of Local Government Finance. The base rate is then multiplied by a productivity factor that is determined by the soil's corn-growing ability. The productivity factor varies from about 0.5 to 1.3...."Farmers may not get much sympathy from other Indiana residents," DeBoer said. "The rising tax bills result from the same factors raising farm incomes and property values. And in rural communities, if farmers pay more, homeowners pay less. Homeowners are the majority in every Indiana county.
"When times are good, perhaps the best advice for farmers is to hold some back for taxes, because taxes will go up - four years later."
Our county in Ohio adjusted the CAUV (Current Agricultural Use Valuation) this year. My taxes went up approximately 180%, from about $4 per acre to around $11 per acre on bare ground. Not bad for land that would bring at lease $150 an acre in cash rent right now. The only concern will be how sticky that number will be on the way down when times aren't as good.
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