Form Et 36 - Qualified Farm Property Annual Report Form For Estate Tax Valuation - 2005 Page 2
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2ET 36
Rev. 2/05
Page 2
General Information
The four-year rule
The estate remains open for four years. The CAUV will be disallowed if, during that time, the
farm property is transferred to a nonqualified heir or the estate discontinues the qualified use
R.C. Section
of the property. Qualified use is considered terminated if property passes to a nonqualified
5731.011(E)
heir even though the property is still used for farming. If one of these situations occurs, the
department must be notified within nine months and a recapture tax (explained below) will
be assessed against the person who is disposing of the property or terminating the qualified
use.
Annual report
The qualified heirs are required to file an annual report, estate tax form 36, on the second,
third and fourth anniversaries of the decedent’s date of death. The first annual report is due
no sooner than 60 days before and no later than the second anniversary date of the decedent’s
date of death. Failure to timely file the annual reports will result in the assessment of the
recapture tax. Please provide a copy of the most current county auditor’s property tax
record card showing the CAUV calculation, parcel number, total acreage and current owner’s
name with the final annual report.
The recapture tax is the amount of tax savings realized in the decedent’s estate because of
Recapture tax
the reduction in value of the farm property. For example:
R.C. Section
5731.011(E)
Assume the estate tax return shows all property at fair market value result-
ing in a tax of $25,000. However, when the estate reduces the farm prop-
erty to CAUV, the tax actually due is only $8,000. Therefore, the savings
realized is $17,000. This amount would also be the amount of recapture
tax.
Payment
The payment of recapture tax is the responsibility of the qualified heirs. Interest is calcu-
lated on the recapture tax from nine months after the decedent’s date of death. If a qualified
heir dies, no recapture tax will be assessed.
If any portion of the CAUV property is sold, transferred or converted to nonqualified use, the
Amended filings
estate must file an amended estate tax form 2X showing the increase from the current
CAUV value to the fair market value. The estate will also be required to file an amended
estate tax form 34 reflecting the sale or conversion of the property.
Miscellaneous
If the sale is to another qualified heir, there is no recapture tax.
information
If the sale is to a nonqualified heir, the recapture tax is assessed based upon the percentage
regarding the sale of
of tax the portion of property sold generates.
CAUV property
If the property sold is either the one-acre homesite or building only, there is no recapture tax,
since that part of the property was originally included and taxed at fair market value.
Where to file
Ohio Department of Taxation
Estate Tax Division
the completed
P.O. Box 183050
estate tax form 36
Columbus, OH 43218-3050
(800) 977-7711 or (614) 387-1976
or FAX to (614) 387-1984
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