Price and Quantity Effects of the German Real Estate Transfer Tax

Kunka Petkova, Alfons Weichenrieder

Publication: Working/Discussion PaperWU Working Paper

Abstract

This paper analyzes the tax effects of the German real estate transfer tax (RETT).
While the vast majority of single-family houses in Germany are owner-occupied,
apartments are usually held by private and incorporated investors. For this reason,
we conducted a regression analysis to determine the effects of increasing RETT on
the number and the prices of transactions separately for these two market segments.
Our findings suggest that increasing the RETT by 1% is associated with a decline
in transactions by 0.23% for single-family houses, but with no significant effect on
the prices of traded houses. Conversely, for apartments, we find no significantly
negative effects on the transactions, but the price effect of the RETT tends to be
negative. Finally, for vacant lots, we find even larger quantity effects than for singlefamily
houses suggesting roughly an elasticity of -1. The results for this specific
market segment indicate that the government operates near the top of a Laffer
curve.
Original languageEnglish
Place of PublicationVienna
PublisherWU Vienna University of Economics and Business
Publication statusPublished - 15 Jun 2017

Publication series

NameWU International Taxation Research Paper Series
No.2017-07

WU Working Paper Series

  • WU International Taxation Research Paper Series

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