Was labor to repair or remodel a long road used primarily to access a residence nontaxable residential real-property work, even if it could also serve a ranch?

Plain-English summary

A paving contractor asked about a long road leading to a residence and adjacent home parking area. The road primarily provided residential access but could also serve as a ranch road.

The Comptroller said farm and ranch roads were not normally residential improvements. However, the part used to provide access to the residence was residential realty, and labor to repair or remodel the road leading to the residence was not taxable under Rule 3.357.

What this means for you

Under the 1988 letter, actual residential-access use could give part of a mixed-use farm or ranch road residential treatment.

Common questions

Were farm and ranch roads normally residential? No.

Was the residential access portion treated as residential? Yes.

Was labor to repair the road leading to the residence taxable? No.

Citations and references

• 34 Tex. Admin. Code Rule 3.357, cited for the residential real-property result.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8802L0862D09

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

February 19, 1988

Dear ****:

Thank you for your recent letter which is restated in part with response
below.

We are a paving contractor principally working for the State Highway
Department. Occasionally, however, we do some private work. My question was
with reference to a paving a rather lengthy stretch of road ultimately leading
to a residence and/or the adjacent parking area at the home. Although the road
is primarily used as an access to the residence, it could also be used as a
ranch road. Would this entire project be deemed residential construction,
thereby only owing sales tax on the materials purchased for use on the job, or
would some portion of the labor be taxable as well?

Response: Farm and ranch roads are not normally considered to be
residential improvements to realty. However, if a road is used to provide
access to a residence, that part will be considered a residential improvement
to realty. Therefore, labor to repair or remodel any road leading to the
residence would not be taxable under Rule 3.357.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions or need more information, please call our
toll-free number
1-800-531-5441. The regular number is 512/463-4600. You may write me at
the Tax Policy Division.

Sincerely,
Al Van Allen
Tax Policy Division