Transaction Taxes in a Search Model of the Housing Market

Transaction Taxes in a Search Model of the Housing Market
Author: Per Lundborg
Publisher:
Total Pages:
Release: 1998
Genre:
ISBN:

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We incorporate transaction taxes in a housing market search model with endogenous house prices and show that these taxes unambiguously create lock-in effects that reduce welfare. The lock-in effects are larger at low vacancy rates. Seller taxes raise prices and buyer taxes lower them and this asymmetry helps to explain the differences in the welfare effects of the two taxes. Lock-in effects are smaller with a buyer tax since the price reduction dampens the negative effect on search effort caused by the tax.

To Own Or to Rent?

To Own Or to Rent?
Author: Lu Han
Publisher:
Total Pages: 0
Release: 2022
Genre: House buying
ISBN:

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Using sales and leasing data, this paper finds three novel effects of a higher property transaction tax: higher buy-to-rent transactions alongside lower buy-to-own transactions, despite both being taxed; lower sales-to-leases and price-to-rent ratios; and longer time-on-the-market. This paper explains these facts by developing a search model with entry of investors and households who decide to own or rent. The transaction tax increases the demand for rental properties, which reduces the homeownership rate and homeowners' mobility. The deadweight loss from the tax is large at 79% of revenue, with 40% of this due to the decision to own or to rent.

Mansion Tax

Mansion Tax
Author: Wojciech Kopczuk
Publisher:
Total Pages: 58
Release: 2014
Genre: Economics
ISBN:

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Houses and apartments sold in New York and New Jersey at prices above $1 million are subject to the so-called 1% "mansion tax" imposed on the full value of the transaction. This policy generates a discontinuity (a "notch") in the overall tax liability. We rely on this and other discontinuities to analyze implications of transfer taxes in the real estate market. Using administrative records of property sales, we find robust evidence of substantial bunching and show that the incidence of this tax for transactions local to the discontinuity falls on sellers, may exceed the value of the tax, and is not explained by tax evasion (although supply-side quality adjustments may play a role). Above the notch, the volume of missing transactions exceeds those bunching below the notch. Interpreting our results in the context of an equilibrium bargaining model, we conclude that the market unravels in the neighborhood of the notch: its presence provides strong incentive for buyers and sellers in the proximity of the threshold not to transact. This effect, the identification and recognition of which is novel to this paper, is above and beyond the standard extensive margin response. When present, unraveling affects interpretation and estimation of bunching estimates. Finally, we show that the presence of the tax affects how the market operates away from the threshold---taxation increases price reductions during the search process and in the bargaining stage and weakens the relationship between listing and sale prices. We interpret these results as demonstrating that taxation affects the ultimate allocation in this search market.

Can Property Taxes Reduce House Price Volatility? Evidence from U.S. Regions

Can Property Taxes Reduce House Price Volatility? Evidence from U.S. Regions
Author: Mr.Tigran Poghosyan
Publisher: International Monetary Fund
Total Pages: 26
Release: 2016-11-10
Genre: Business & Economics
ISBN: 1475552793

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We use a novel dataset on effective property tax rates in U.S. states and metropolitan statistical areas (MSAs) over the 2005–2014 period to analyze the relationship between property tax rates and house price volatility. We find that property tax rates have a negative impact on house price volatility. The impact is causal, with increases in property tax rates leading to a reduction in house price volatility. The results are robust to different measures of house price volatility, estimation methodologies, and additional controls for housing demand and supply. The outcomes of the analysis have important policy implications and suggest that property taxation could be used as an important tool to dampen house price volatility.

International Encyclopedia of Housing and Home

International Encyclopedia of Housing and Home
Author:
Publisher: Elsevier
Total Pages: 3870
Release: 2012-10-09
Genre: Social Science
ISBN: 0080471714

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Available online via SciVerse ScienceDirect, or in print for a limited time only, The International Encyclopedia of Housing and Home, Seven Volume Set is the first international reference work for housing scholars and professionals, that uses studies in economics and finance, psychology, social policy, sociology, anthropology, geography, architecture, law, and other disciplines to create an international portrait of housing in all its facets: from meanings of home at the microscale, to impacts on macro-economy. This comprehensive work is edited by distinguished housing expert Susan J. Smith, together with Marja Elsinga, Ong Seow Eng, Lorna Fox O'Mahony and Susan Wachter, and a multi-disciplinary editorial team of 20 world-class scholars in all. Working at the cutting edge of their subject, liaising with an expert editorial advisory board, and engaging with policy-makers and professionals, the editors have worked for almost five years to secure the quality, reach, relevance and coherence of this work. A broad and inclusive table of contents signals (or tesitifes to) detailed investigation of historical and theoretical material as well as in-depth analysis of current issues. This seven-volume set contains over 500 entries, listed alphabetically, but grouped into seven thematic sections including methods and approaches; economics and finance; environments; home and homelessness; institutions; policy; and welfare and well-being. Housing professionals, both academics and practitioners, will find The International Encyclopedia of Housing and Home useful for teaching, discovery, and research needs. International in scope, engaging with trends in every world region The editorial board and contributors are drawn from a wide constituency, collating expertise from academics, policy makers, professionals and practitioners, and from every key center for housing research Every entry stands alone on its merits and is accessed alphabetically, yet each is fully cross-referenced, and attached to one of seven thematic categories whose ‘wholes' far exceed the sum of their parts

Property Taxes and House Values

Property Taxes and House Values
Author: John Yinger
Publisher: Elsevier
Total Pages: 233
Release: 2013-10-22
Genre: Business & Economics
ISBN: 1483265765

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Property Taxes and House Values: The Theory and Estimation of Intrajurisdictional Property Tax Capitalization explains the link between property taxes and house values and elaborates public policies that alter property taxes, such as assessment reform and state aid. This book introduces the concept of property tax capitalization and discusses the importance of tax capitalization for public policy. The topics include the simple algebra of property tax capitalization, inherent econometric difficulties, and household utility maximization problem. The anticipation of revaluation, revaluation in Brockton, and nonlinear two-stage least squares estimator are also described. This text likewise covers the estimates of the degree of property tax capitalization and horizontal equity of tax rate changes. This publication is recommended for academics, public officials, and homeowners.

Housing Market Challenges in Europe and the United States

Housing Market Challenges in Europe and the United States
Author: P. Arestis
Publisher: Springer
Total Pages: 283
Release: 2009-11-18
Genre: Business & Economics
ISBN: 0230246982

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Housing finance structures and Institutional and regulatory/fiscal aspects in housing have changed significantly in recent years. This book examines the development in housing markets in Europe and the US, and looks at ways to make housing more affordable and housing market developments more stable.

Who Bears the Burden of Real Estate Transfer Taxes?

Who Bears the Burden of Real Estate Transfer Taxes?
Author: Mathias Dolls
Publisher:
Total Pages:
Release: 2019
Genre:
ISBN:

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This paper examines the effects of real estate transfer taxes (RETT) on house prices using a rich micro dataset on German properties covering the period from 2005 to 2018. We exploit a 2006 constitutional reform that allowed states to set their own RETT rates, leading to frequent increases in states' tax rates in subsequent years. Our monthly event study estimates indicate a price response that strongly exceeds the change in the tax burden for single transactions. I.e., twelve months after a reform, a one percentage point increase in the tax rate reduces property prices by on average 3.5%. Effects are stronger for apartments and apartment buildings than for singlefamily houses. We interpret these results in the context of a theoretical model that accounts for the effects of RETT on a property's resale value. If a property is expected to be traded more frequently in the future, the decline in its price can exceed the increase in the tax burden. Moreover, larger price effects can be explained by higher bargaining power of sellers.

Ibss: Economics: 1999

Ibss: Economics: 1999
Author: Compiled by the British Library of Political and Economic Science
Publisher: Psychology Press
Total Pages: 660
Release: 2000-12-07
Genre:
ISBN: 9780415240093

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IBSS is the essential tool for librarians, university departments, research institutions and any public or private institution whose work requires access to up-to-date and comprehensive knowledge of the social sciences

Labor Tax Reductions in Europe

Labor Tax Reductions in Europe
Author: Marcin Bielecki
Publisher:
Total Pages:
Release: 2018
Genre:
ISBN: 9783957294890

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We use a New Keynesian DSGE model with search frictions on the housing market to evaluate how financing a labor tax reduction by higher property taxation affects the real economy and welfare. Search on the housing market enables us to explicitly model stocks and flows, which is necessary to differentiate between recurrent property taxes (levied on stocks) and property transaction taxes (levied to flows). We find that using recurrent property taxation as financing instrument outperforms other instruments although all policy measures increase aggregate economy-wide welfare. Our simulations suggest that using property transaction taxation as financing instrument is the least favorable measure.