Tax Abatement

Multi-family limited tax abatement program

There seems to be a lot of confusion about what the Multi-Family Limited Tax Abatement Program is.  Builders, realtors and even homeowners have imparted mixed messages and incorrect claims.  What we’d like to do is clarify not only what the program is, but also how it applies to you and the future value of your home at Midtown Lofts.  Please read on and see how tax incentives for Midtown Lofts are exceptional benefits of buying a home here.

Why is there a tax incentive?

The goal is to stimulate the construction of new multifamily housing or to encourage the rehabilitation of vacant and underutilized buildings for multi family housing in urban centers lacking sufficient housing opportunities.  The city of Tacoma hopes to encourage the development of multifamily housing in Tacoma’s fourteen Mixed-Use Centers. To accomplish this, the City of Tacoma offers a property tax exemption to eligible property owners.

What is the limited tax abatement?

The value of new housing or improvements of projects accepted under this chapter “are exempt from ad valorem, property taxation for ten successive years starting with January 1 of the year immediately following the calendar year of issuance of the certificate of tax exemption eligibility.” (Excerpted from RCW 84.14.020)  However, the exemption does not include the value of land or non-housing related improvements that don’t qualify under this chapter.  What this means is that the land itself is still taxable, but the improvements, in other words your home, are not.

What is required?

A property owner, in this case the developer, must meet the following criteria:

  1. The new or rehabilitated multiple housing units must be located in one of the target areas determined by the city.
  2. The housing unit must meet the criteria adopted by the governing authority, which may include height, density requirements etc. as determined by the city.
  3. Of the new, converted or rehabilitated spaces a minimum of 50% must be used for permanent residential occupancy (month to month rentals or owner occupied).
  4. New construction and rehabilitation improvements must be completed within three years from the approval date.
  5. The property must be vacant for 12 months prior to application submission or an applicant must provide adequate relocation housing for tenants of the property.
  6. The applicant must enter into a contract with the city agreeing to the terms and conditions acceptable to the governing authority.

For Midtown Lofts, the above criteria have been met and an acceptance letter from the City of Tacoma has been obtained for the 10-year limited tax abatement. 

What does this mean for you, the buyer?

Upon completion of the building, which is designated by receipt of a Certificate of Occupancy from the city, the limited tax abatement will begin the following January.  The tax abatement for Midtown Lofts was accepted under the 10-year program, so will continue for 10 years, ending on December 31st of the 10th year.  The limited tax exemption applies only to the building improvements portion of your tax bill, so you will still receive a tax bill, but it will be substantially reduced based on the value of the building improvements associated with your home.

If you still have questions regarding this program, please contact our sales team or come visit us at our on-site showroom.