Section 0600-12-.04 - DETERMINING WHEN MULTIPLE-USE SUBCLASSIFICATION IS APPROPRIATE(1) Many properties are used for more than one purpose simultaneously. Where the uses of a property fall into two (2) or more subclasses, the assessor shall determine the share of the market value of the property attributable to each subclass and assess the property according to the proportion each share constitutes of the total market value.(2) Multiple-use subclassification is appropriate only where each of the uses recognized for subclassification is distinct and ongoing. Where a parcel is used predominantly for one purpose and another use is sporadic and generates de minimis annual income, the parcel should be assessed in accordance with the predominant use. Where a parcel is used predominantly for one purpose and another use as described above is sporadic but generates regular annual income that is not de minimis, the parcel should be assessed using multiple-parcel subclassification.(3) Below are examples of when multiple-use subclassification is appropriate:(a) Home businesses run from a residential property to carry on a trade or business such as a beauty salon, small day care, or car repair service (portion used in business to be subclassified commercial);(b) A building with a retail store on the first floor and an owner-occupied residence on the second floor (portion used in business to be subclassified commercial);(c) A manufacturing facility with excess land used for farming (portion farmed to be subclassified farm);(d) Mobile home parks with on-site privately owned mobile homes (portions rented to be subclassified commercial, owner-occupied mobile home to be subclassified residential);(e) Properties used in the commercial production of farm products and nursery stock but which also have uses not within the definition of "agriculture" otherwise provided by law. As used in the rules, "commercial production of farm products and nursery stock" means the production is consistent with a farm operating for profit for federal income tax purposes. Examples requiring a split subclassification of agricultural property would include portions of a farm that generate regular annual income (as opposed to sporadic and de minimis income) from regular rental of space set aside for parking or camping, or portions of a horse farm devoted to uses such as a shop engaged in the retail sale of tack. Boarding of animals integral to breeding, raising and development of horses and other livestock at the property is not considered a commercial use for purposes of these rules;(f) Portions of farms with commercial activities unrelated to production of farm products or livestock, except commercial activities constituting "agriculture" as defined by law. Improvements and structures on, and land that is part of, a farm engaged in the commercial production of farm products or nursery stock that are used for "agriculture" may be classified as farm property, provided the land improvement or structure in question is used for one or more of the following: (1) recreational or educational activities;(2) retail sales of products produced on the farm, but only if a majority of the products sold are produced on the farm; or(3) entertainment activities conducted in conjunction with, but secondary to, the commercial production of farm products or nursery stock. Commercial subclassification of those portions of a farm used for events unrelated to agriculture shall be limited to the actual land and structures dedicated to the unrelated uses.The foregoing are only examples and do not represent all situations where multiple-use subclassification is appropriate.
Tenn. Comp. R. & Regs. 0600-12-.04
Original rules filed August 23, 2017; effective 11/21/2017.Authority: T.C.A. §§ 4-3-5103, 67-1-305, and 67-5-801(b).