Form Et 36 - Qualifi Ed Farm Property Annual Report For Estate Tax Valuation Page 2
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1
2ET 36
Rev. 4/12
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 nonqualifi ed heir or the estate discontinues the quali-
R.C. Section
fi ed use of the property. Qualifi ed use is considered terminated if property passes to a
5731.011(E)
nonqualifi ed heir even though the property is still used for farming. If one of these situ-
ations occurs, the department must be notifi ed within nine months and a recapture tax
(explained below) will be assessed against the person who is disposing of the property
or terminating the qualifi ed use.
Annual report
The qualifi ed heirs are required to fi le an annual report, estate tax form 36, on the second,
third and fourth anniversaries of the decedent’s date of death. The fi rst 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 fi le the annual reports will result in the assess-
ment 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 fi nal annual report only.
Recapture tax
The recapture tax is the amount of tax savings realized in the decedent’s estate because
of 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 re-
sulting in a tax of $25,000. However, when the estate reduces the farm
property 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 qualifi ed heirs. Interest is calculated
on the recapture tax from nine months after the decedent’s date of death. If a qualifi ed
heir dies, no recapture tax will be assessed.
Amended fi lings
If any portion of the CAUV property is sold, transferred or converted to nonqualifi ed use,
the estate must fi le 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 fi le an amended
estate tax form 34 refl ecting the sale or conversion of the property.
Miscellaneous
If the sale is to another qualifi ed heir, there is no recapture tax.
information
If the sale is to a nonqualifi ed heir, the recapture tax is assessed based upon the percent-
regarding the sale of
age 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 fi le
Ohio Department of Taxation
Estate Tax Unit
the completed
P.O. Box 183050
estate tax form 36
Columbus, OH 43218-3050
(800) 977-7711
or FAX to (614) 387-1984
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