Holiday House in Cape May enjoys property tax holiday as exemption is granted.

The Tax Court granted an exemption to Holiday House, a Christian retreat house that is owned by the Girls Friendly Society of Pennsylvania (GFS) located in Cape May.  GFS is a religious and charitable nonprofit organization.  The Holiday House is 4,400 square feet, with 35 guest rooms and can accommodate up to 50 guests.  Built in the late 1800s, the house has been designated a key historic property.  GFS began using it in 1910 and purchased it in 1930.

Holiday House is occupied seasonally from May through September.  It is located two blocks from the beach.  For about the first six weeks of the summer season the house is used by GFS.  During the remainder of the summer season, rooms are available for rent, which was at the heart of this property tax exemption case.

GFS argued that the rentals were available only to those affiliated with religious groups and choirs in the Episcopalian Church and to individual GFS members and their families and are not available to the general public.  Moreover, it argued that the rentals are not conducted for profit.  GFS also argued that while rented, the facility is still supporting the organization’s work by providing employment opportunities for GFS teenagers and income to offset the cost for food and utilities and operating expenses.

The municipality argued that the predominate purpose of the Holiday House is to give members and non-members a vacation at the shore.   While the municipal assessor testified that the property “appears to be a retreat house, unpretentious, simple and peaceful” it is advertised in a way that “give[s] the impression that the Holiday House is [also] a very affordable bed and breakfast open to the general public.”

The Tax Court in Girls Friendly Society of Pennsylvania v. City of Cape May held that the actual and predominant use of the property is for the benefit of GFS’ members, which qualified as a charitable purpose and, therefore, the property is entitled to the exemption.  The court went on to find that the house was actually used for this purpose and that the use of the property by nonmembers for a fee does not destroy the exemption.

NOTE:  We at McKirdy & Riskin would like extend our best wishes to the people of Cape May and all communities along the New Jersey coast that are struggling in the aftermath of Hurricane Sandy.  Our thoughts and prayers are with you.

For more on cases addressing exemptions see:

Tribe’s First Amendment Rights Not Violated by Denied Tax Exemption  

Tax Court to Nonprofit – Only 2% Exempt

Property Tax Exemption for Sale

Bergen County “Group Homes” Entitled to Tax Exemption

Property Tax Exemption Denied to West Windsor Non-Profit

Property Tax Exemption Does Not Require Compliance With Municipal Zoning Ordinance