TOWNHOUSES PURCHASED BY A NOT-FOR-PROFIT SCHOOL TO HOUSE FACULTY ARE TAX EXEMPT (SECOND DEPT),

The Second Department, reversing the city board of assessment review (BAR) determined that townhouses purchased by the Rye County Day School (RCDS), a not-for-profit school, to house faculty were tax exempt:

RPTL 420-a(1)(a) provides that “[r]eal property owned by a corporation or association organized or conducted exclusively for religious, charitable, hospital, educational, or moral or mental improvement of men, women or children purposes, or for two or more such purposes, and used exclusively for carrying out thereupon one or more of such purposes either by the owning corporation or association or by another such corporation or association as hereinafter provided shall be exempt from taxation as provided in this section.” The word “exclusively” in the statute has been broadly defined as “principally” or “primarily” … , such that “purposes and uses merely auxiliary or incidental to the main and exempt purpose and use will not defeat the exemption” … . Thus, the two-part test for determining entitlement to a property tax exemption under RPTL 420-a is “(1) whether the owner of the property is organized or conducted exclusively, or primarily, for an exempt purpose; and (2) whether the particular property for which the exemption is sought is itself primarily used for an exempt purpose” … .

RCDS demonstrated that the “primary use” of the faculty-occupied townhouses furthered its “primary purpose” of operating as a school.

… RCDS demonstrated that the “primary use” of the faculty-occupied townhouses furthered its “primary purpose” of operating as a school … . Matter of Rye Country Day Sch. v Whitty, 2023 NY Slip Op 00323, Second Dept 1-25-23

Practice Pont: Faculty housing for a not-for-profit school is tax exempt.