Multifamily Property Tax Exemption (MFTE)

The Multifamily Property Tax Exemption (MFTE) Program is a statewide framework established by the Washington State Department of Commerce in 1995 to incentivize multifamily housing investment through temporary property tax exemptions on residential improvements, implemented by participating cities and counties. Property owners are exempt from taxes on residential improvements for a defined period while continuing to pay taxes on land and non-residential portions. More than 50 Washington jurisdictions participate.

The program offers three main tiers: an 8-year exemption with no mandatory affordability requirements (though jurisdictions may impose local requirements); a 12-year exemption requiring at least 20% of units be affordable to households at or below 80% AMI (low income) or 115% AMI (moderate income); and a 20-year exemption for homeownership-targeted affordable development. In 2025, the Legislature created a new 20-year Transit-Oriented Development (TOD) MFTE category for multifamily properties, requiring a recorded affordability covenant or deed restriction.