House prices and taxes

Mads Gjedsted Nielsen, Aleksandra Rzeznik

Publikation: Working/Discussion PaperWorking Paper/Preprint

Abstract

By using the 2007 municipality reform in Denmark as an exogenous shock to municipal tax rates, we find that a 1%-point increase in income tax rates lead to a drop in house prices of 7.9% and a 1‰-point increase in the property tax rates lead to a 1.1% drop in house prices. The simple present values of a 1%-point perpetual income tax increase and a 1‰-point property tax increase, relative to the median house price, are 7% and 3.3%, respectively. Our findings are thus in line with the predicted median tax loss. This indicates that the housing market efficiently incorporates taxes into house prices. The exogeneity of the shock to taxes and the size of the data set is an improvement over earlier studies.
OriginalspracheEnglisch
PublikationsstatusVeröffentlicht - 2016

Österreichische Systematik der Wissenschaftszweige (ÖFOS)

  • 502009 Finanzwirtschaft

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