Keep the Washington House, Rent It, Buy the Next One
Program and regulatory figures verified September 19, 2026. Details change; confirm your scenario with us.
Washington gained a statewide rent cap in 2025. If you are thinking about keeping the departing home, that is now part of the decision.
Why this structure comes up in Washington
Two reasons, and they are different from the reasons elsewhere.
The first is the market. Days to pending rose in thirteen of the seventeen Washington metros we track, and eastern and coastal markets now run 59 to 71 days. Renting converts a lengthening timing problem into an income question.
The second is the excise tax. REET is triggered by a sale, so holding the property defers roughly 1.65% of its value. That is a deferral rather than an escape, since the tax applies whenever the sale eventually happens, but when two structures are otherwise close, the timing of a five-figure cost is a fair input.
The rent cap, which is new
HB 1217 took effect in 2025 and changed the arithmetic of being a Washington landlord.
A landlord may not increase rent by more than 7% plus the Consumer Price Index, or 10 percent, whichever is less, over any 12-month period. The CPI input is the June 12-month percent change in the Consumer Price Index for all urban consumers in the Seattle area.
Because the formula produces a different answer each year, the Department of Commerce publishes the allowable figure: 10% for 2025, 9.683% for 2026, and 10% for 2027, where the calculated increase again exceeded the cap.
Two operational rules matter as much as the percentage. A landlord may not increase the rent for any type of tenancy during the first 12 months after the tenancy begins. And at least 90 days advance written notice is required in writing before raising rent.
Manufactured and mobile home lot rents are capped separately at 5% a year.
The exemptions, and why we are not listing them
Exemptions exist. The Department of Commerce says so plainly, and points to RCW 59.18.710 for the definitions.
Secondary sources describe exemptions for new construction and for owner-occupied properties including duplexes, triplexes, fourplexes and accessory dwelling units. That description may well be right. We are not repeating it here, for a specific reason.
The question that actually matters to someone reading this page is narrow: does the cap apply to a single-family home that the owner has moved out of and rented? An owner-occupied exemption, by its terms, would not cover a house whose owner has left. Getting that wrong in either direction would change how someone sets rent for years.
We tried to read RCW 59.18.710 directly and could not retrieve it. Both the Department of Commerce page and the Attorney General's landlord-tenant page decline to enumerate the exemptions. So the honest position is this: exemptions exist, they are in RCW 59.18.710, and whether yours qualifies is a question for a Washington attorney before you set a rent, not after.
What changed federally in September
Fannie Mae restructured rental income policy in Announcement SEL-2026-08, dated September 2, 2026, mandatory for all loans with application dates on and after November 1, 2026. Departing residences are governed by B3-3.8-05; the content formerly at B3-3.1-08 has moved.
Lease agreements are not permitted for any departing residence. Market rent must come from a complete appraisal including market rents, a Form 1007 comparable rent schedule, or a market analysis tool supported by at least three comparable rentals.
The calculation is gross market rent times 75%, less that property's full PITIA. A positive result offsets the departing residence's own payment. It does not become qualifying income. Six months of PITIA reserves apply where property-management experience is under 12 months. See the Form 1007 page.
The two rules pull against each other
Worth naming, because it is specific to Washington.
The federal rule underwrites you on market rent, established from an appraisal or a Form 1007. Washington law then limits how quickly your actual rent may rise toward or with that market.
So a Washington landlord can be qualified on a market-rent figure and then be constrained in reaching it over time, particularly if the initial rent is set below market. Setting the opening rent deliberately matters more here than in an uncapped state like Florida.
Compare the structures on the structures page.
Excise tax treatment of a specific transaction, rent-cap exemptions, and relief eligibility are legal and tax questions. Your closing agent, your county assessor, your CPA or a Washington attorney own those answers. We flag them because they change the numbers we underwrite.
Frequently asked questions
How much can rent be raised in Washington in 2026?
9.683%, as published by the Washington Department of Commerce. HB 1217 caps increases at 7% plus CPI or 10%, whichever is less, over any 12-month period, using the June 12-month change in CPI for urban consumers in the Seattle area. The published figure was 10% for 2025 and is 10% for 2027.
Can I raise the rent in the first year of a Washington tenancy?
No. A landlord may not increase the rent for any type of tenancy during the first 12 months after the tenancy begins. After that, increases are subject to the annual cap and require at least 90 days advance written notice.
Is a single-family rental exempt from Washington's rent cap?
Exemptions exist and are defined in RCW 59.18.710, but neither the Department of Commerce nor the Attorney General enumerates them on their public pages, and we do not publish a list we could not verify at the statute. Whether a departing residence you have moved out of falls inside or outside the cap is a question for a Washington attorney before you set the rent.
Does renting my Washington home avoid the excise tax?
It defers it. Real estate excise tax is triggered by a sale, so holding the property postpones roughly 1.65% of its value in tax until the sale eventually happens. That timing can matter when two structures are otherwise close, but the tax is not avoided.
Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about financing, not a loan commitment and not legal, tax, or real estate advice. Excise tax treatment, rent-cap exemptions, and county relief thresholds change and depend on your facts; your closing agent, your county assessor, your CPA or a Washington attorney, and your real estate agent each handle their own part. Loans are subject to borrower and property qualification.