The rapid expansion and evolution of state and local property tax exemptions has become a critical tool in affordable and workforce housing finance. In many jurisdictions, these exemptions can materially improve project feasibility, enhance debt service coverage and, in some cases, function as a partial substitute for traditional subsidy sources.

At the same time, these programs are highly jurisdiction-specific and frequently require careful structuring, ranging from nonprofit ownership overlays to public agency participation, ground lease arrangements and long-term regulatory agreements. As a result, the availability of an exemption is not simply a real estate tax question but a threshold legal and financing consideration that can directly impact lender underwriting, including by Fannie Mae and Freddie Mac.

That’s why we created a high-level overview of key exemption frameworks in several major markets, along with structural considerations relevant to developers, lenders, and investors evaluating affordable housing transactions.

Key Takeaways Across Jurisdictions

• Many exemptions require public or nonprofit ownership structures, even where economic control remains private
• Ground lease structures (such as in Texas and Florida) are increasingly common
• Several programs require long-term regulatory agreements (30–99 years)
• Annual compliance and filings are a consistent risk area
• Lenders, including Fannie Mae and Freddie Mac, may underwrite to exemptions—but only where durability and compliance risk are well understood

Click here to read our guide.

Miles & Stockbridge’s Real Estate Finance Team regularly advises developers, lenders and investors on structuring transactions to qualify for these exemptions while maintaining financing flexibility. We would be pleased to discuss how these frameworks may apply to specific transactions or jurisdictions.

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.