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Home Businesses on Residential Tracts of Land

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mkalwood

Freshman Member
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May 27, 2009
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State
Texas
Does having a home-based business (seperate structure) on the same Residential tract of land you live on make that land "Commercial?" (i.e. Will the Residential tract you live on now be taxed as Commercial and/or appraised as Commercial if a business is on your Residential tract?) The tract of land in question and all the surrounding tracts are either Residential or Agricultural tracts.

State: Texas
 
The building and the business are two different things.
 
Would depend on zoning and the particular nuances of your taxing district. Many residential districts in our area allow for home occupations in residentially zoned areas. Doesn't make them commercial.
 
Also depends on the building for business.

If a typical pole barn utilized for business purposes, what's the problem? Do other properties have additional pole barns? Make sure yours "fits" with the neighborhood, minus the business equipment, sign, etc., does it have appeal to the average residential purchaser?

We are required to determine highest and best use of the property - sounds like your area is residential in nature and use. I would definitely make sure my property did not stand out lilke a sore thumb if I were planning to build a business building, and I would make sure any "pole barn" or other building I want to use for my business would appeal to the "typical" purchaser in my area.

Keep the commercial building within typical residential standards.
 
If you are in a city jurisdiction, and the land is zoned some version of residential, a "business" is generally restricted to those where the owner lives on the property and does not attract significant outside traffic to the location. Such as an accountant, real estate agent, appraiser, author, etc. If you are outside the city, in Texas, you still may have some zoning issues. Most major lakes now have zoning, and some business activities have been restricted. For example, an acreage tract near Lake Ray Roberts was being used as a tree farm for nursery operations. The county closed it down due to complaints that the property was zoned for residential use and the truck traffic was a nuisance.

For properties outside of a city and any zoning, location, utilities, surrounding uses, all will determine the probable highest and best use for the property. For example, you may have a property off the beaten path that is being used for some form of commercial usage. Example is an auto repair shop, headquarters for a wrecker company, etc, but the surrounding properties are residential. The probable H&BU would be residential even though it is being used for a secondary commercial usage. Conversely, you have a residence on a major road, and the predominant properties have some form of neighborhood commercial uses. Even without zoning, the H&BU would probably be for some commercial use. At the same time, if the property on the highway is the only property being used for a commercial use, the H&BU would most likely be residential. Do not confuse H&BU with allowable uses. In Texas, absent zoning and deed restrictions, there's very few restrictions. There are some general Texas statutes regarding contamination, etc that come into play, but you can build a slaughter house and feed lot in the middle of a residential area. The legal hassles would probably preclude such activity but it can be done.

Hope this helps.
 
Does having a home-based business (seperate structure) on the same Residential tract of land you live on make that land "Commercial?" (i.e. Will the Residential tract you live on now be taxed as Commercial and/or appraised as Commercial if a business is on your Residential tract?) The tract of land in question and all the surrounding tracts are either Residential or Agricultural tracts.

State: Texas

You have actually intermixed several different issues all into one post. For example, your state/county/city rules regarding assessment for taxation purposes may very well be sweepingly different than what an independent appraiser engaged for mortgage purposes might need to do or say about the issues on this.

So..... Why do you ask these things? I don't care to guess about it.
 
Unless it is as flagrant zoning violation I would not make a big deal about it. The most extreme case I recall was a blacksmith shop being run out of a detached shop. The shop owner was renting the shop and had a sign and parking. It was a nice 30 x 50 metal shop with it's own 200 amp three phase service. It was in an R-1 zone so it was technically illegal. The area was semi-rural with the closest neighbor about 1/4 mile away.

I noted the use in the report and treated the shop like a big detached garage. I got a call back wanting me to add an income approach. I responded that it was a commercial use and it would take a CG for that. Never heard another word.
 
To clarify:

I live on a homestead with two homes on the Residential tract outside of city limits. I'm in a Residential and Agricultural area what some would call "out in the country" or rural area. I'm interested in building a third home or converting an existing one into a licensed by the state Assisted Living or licensed group home. As it is the taxes are high enough for the existing residential homes, so my question is would this "group home" be taxed/appraised as Commercial or Residential by the county? Would the county tax the "group home" as Commercial or would it still be taxed as Residential?
 
You need to contact someone who is familar with your jurisdiction's tax laws. Your question can only be answered by someone very familiar with your States laws. Please contact your local assessor's office or a local tax agent.
 
The previous advice on contacting your county assessor office or a real estate tax lawyer is the best you will get from our forum. Tax assessment is unique to each of the 254 counties in Texas.

It sounds like you're in a unrestricted use area, which is common outside city limits. I would suggest that before you sink a penny into setting up your assisted center business that you do two things:

1. Check your deed for any possible restrictions or covenants to your land. Everyone here in Texas is pretty much live and let live, but you should make sure you are legally in line.

2. I hope you have, but you should definitely make sure you have checked with the state of Texas agency that governs the licensing for such a business. There are distance and access requirements to medical facilities that have to be met and this would only come into play depending how far out you live.

Good luck.
 
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