Does this house already have 2 1/2 baths or are you thinking of adding one where a closet is?

Please clarify:
If the master closet is made into a half bath, is there still a closet in the master? How big?

I have surrendered our one full bath (near the 3 bedrooms) to my invalid Father in Law's needs - shower chair, toilet rails, boxes of gloves, wipes, diapers, cleansers. I just shower there and move to the half bath by the kitchen to dry off and do my hair and teeth and lotion, etc. It is a tiny half bath, but I got a narrow tower storage unit and some pretty boxes, so I have places to keep my stuff out of sight. It works okay.

If you still have enough closet space for two, then the half bath can work. I want to be able to run to the toilet and not be in a "public" area.

If you plan to stay in the home a long time, and you want the half bath, I say do it, as long as there is adequate closet space left. I would not do it simply for resale as not everyone will prefer the half bath to a walk-in closet.

You currently have 2 1/2 baths and want to take away a closet to add another 1/2 bath? Or you currently have 2 1/2 baths and want to take away the 1/2 bath to add a closet?

I think 2 1/2 baths is all any house really needs (unless you have six people or more living in the place) but if you have closet space galore you may be able to sacrifice one to meet other needs. We have 5 bathrooms; 3 full, 2 half for three people. Can you say "overkill"?

I don't understand exactly what you are doing. But you need at least one bathroom per floor, so don't eliminate a half bathroom if there is no other "public" bathroom on that floor (master bath is not "public"). Part of the decision depends on exactly how small the current closet is.

Is this new construction or renovation?

I would not want to trade away a nice closet for a make-shift half bath (or a nice half-bath for a make-shift closet). Those would be my big concerns if we're talking about an existing structure.

Thanks for taking the time to answer and sorry I wasn't more clear!
Here's the situation:
This is new construction, and we have some leeway as to what we want. Currently, the plan has a 1/2 bath in the hallway and also a 5X5 closet in the master. There is another ~5X5 closet in the master too. On the plan, the 1/2 bath and one closet are back to back. So we are considering NOT putting in the 1/2 bath and instead using the space to enlarge that closet. Or we could keep both as is. People in the Houston area are used to HUGE master closets, and 1/2 baths, so either option is still a smart thing to do for resale.

Here is a link that might be useful: This is the floor plan

I think I'd leave the plan as is. You already have two walk-in closets in the master, and the half bath is a nice powder room for visitors.

I forgot to say, we are also a family of 3. And we are moving away from an overkill xamsx! I know exactly what you mean!

I wouldn't change the plan as you suggested. *My* problem with the bathrooms is that there isn't one near the family entrance (garage).

I don't know if this is possible, but could they not do the indent on the outside of the house? If they went straight across then you could go the other way, have twice as big a closet and keep the bathroom.

I'm with chisue... I would've expected that half bath to be just off the garage entrance for those emergency, stuck-in-traffic-too-long situations.

But even where it is, it's nice to have a separate half-bath for guests; I'd leave it as-is.

A change that I would make to the floor plan, if there is room, would be to add a wall with a pocket door between the sink area and the tub/toilet area in the hall bath. That way one person could be brushing teeth, doing hair, etc., while another is showering, using the toilet etc.

Thanks for your input everyone. We had actually considered flipping the 1/2 bath and the laundry room so that the bath would be closer to the garage. As it is, though, from the living area it is further to the 1/2 bath than to the second full bath.