Slumping returns for apartment tax breaks

Plus a study on paying pre- and postnatal care and here comes the budget

Fewer housing developers are cashing in on Washington’s billion-dollar tax break for affordable apartments, per some bleak numbers from the Department of Commerce.

Whenever someone talks about taxes, this nugget of wisdom often comes to mind: Tax something, and you’ll get less of it. The Multifamily Property Tax Exemption was written in the same spirit back in the mid-90s to shore up apartment stock for low-income families.

Since then, it’s handed eight, 12, and 20-year tax breaks to new and old complexes. The longer breaks apply to projects that offer up 20% of their units for tenants making 80% of the area median income per year.¹ Those exemptions apply to select cities by a sort-of schoolyard pick by the state. To date, 57 cities have gotten in on the MFTE game.

MFTE has driven the development of projects like this Tacoma apartment complex.

To put this all in perspective, MFTE breaks helped fund 61,000 apartments from 2007-23, per Commerce. More than 11,000 units were of the income-restricted variety. In 2023 alone, MFTE apartments claimed $1.8 billion in property tax breaks.

That’s a lot more than the 58,600 homes the state’s beleaguered Housing Trust Fund’s built since its creation in 1986. To put this another way, MFTE helped build 2,400 more homes in 16 years versus what the state’s Housing Trust Fund built in 38 years.²