Part 20 published on 01/11/07
Home office not separately assessed as commercial property for realty tax purposes
The question in this case was whether or not home office space within a residence should be treated as commercial space or residential space for purposes of realty assessments (and resulting realty taxes).
The Ontario Assessment Review Board held that the home office space is a “use for residential purposes” as envisioned under the Assessment Act. The Board said:
“The Board is persuaded by the complainant’s argument that the ‘home office’ is a use for residential purposes on the basis that the ‘home office’ space is used solely for the benefit of residents of the house; that no revenue producing activity takes place in the space; that non-resident employees, clients, deliveries and sales people are discouraged from coming to the space; and finally, that the ‘home office’ space has no separate entrance, signage or visitor parking.”
[Editorial note: I believe that this decision may be of interest to many condominium owners, because many residential condominiums contain such “home offices”. Quite apart from the realty assessment and taxation issues, questions may also be raised about whether or not such a “home office” is permitted by the governing documents of the condominium. Many zoning by-laws permit “home occupations” in residential zones. In order to qualify as a “home occupation”, a home business must meet certain strict criteria. If those criteria are met, there may be a good argument that the home business or “home office” is part and parcel of the residential use or, for example, is part and parcel of the “single family dwelling” (and therefore does not contravene any prohibition of commercial uses which may be contained in the governing documents of the condominium).
This decision illustrates similar thinking for assessment purposes.]