CHICAGO - While there is no standard way U.S. state and local jurisdictions calculate real estate taxes, all land is taxed based on either market value or fair use. Here are some other facts about farmland taxation:
* In many Midwestern states, farmland appraisals are based on a formula for current agricultural use value (CAUV): the income a farmer can expect to earn, based on factors including commodity grain prices, farm rental rates, soil type and productivity, production expenses and interest rates.
* Many of these formulas use a multi-year rolling average for income, say tax experts. They are designed to allow farmland to be appraised at rates below true market value, particularly land near urban areas, where property can command a price tag that is beyond what a farmer's income could pay for.
* Record-high crop prices in 2012, and all-time-high farm incomes in 2013, are now factoring in to property tax appraisals. But farm incomes have plummeted since then, by 27 percent in 2014 from the year earlier and likely by another 38 percent in 2015, according to U.S. Department ofAgriculture forecasts.
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* Current low interest rates also push taxes up for farmers. Land is valued at higher levels when interest rates are low as the cost of owning it is less. That can reduce capitalization rates, which are often used in CAUV formulas as a divider to produce a taxable value for land.
