Housing prices and tenure choice with asymmetric taxes and progressivity

This paper studies the effects of tax schedule changes on prices and tenure choice in the housing market. It is shown that, given the present asymmetric treatment of owner-occupants vs. renters, an increase in the degree of progressivity is likely to lead to an increasein the prices of both owner-occupied and rental housing. A numerical example indicates that the effects may be quite large. Equilibrium prices are calculated based on the actual Swedish income tax schedules for 1971 and 1979. According to these simulations the tax changes that took place between these years caused the price of owner-occupied houses to increase by around 30 percent, and the rent level to increase by 2 or 3 percent.     

An econometric model of tenure choice and demand for housing as a joint decision

This paper models a household's choice of tenure and demand for housing services as a joint decision imposing the restriction that both discrete and continuous decisions are derived from a single preference ordering. The utility index for households is the translog form of the reciprocal indirect utility function allowing for random preferences. Each household chooses between the two main tenures, the owner-occupied and subsidised rental sectors, but households may be rationed in either or both of these sectors and refused admission, in which case they are assumed to enter the third sector, uncontrolled rental. The model is estimated on UK data for 5895 households.     

Housing decisions and the U.S. income tax: An econometric analysis

This paper examines the effects of the current income tax treatment of owner-occupied housing on the quantity of housing consumed and on the tenure choice by various groups. Cross-sectional data for 1970 are used to estimate jointly tenure choice and housing demand equations. The equations' parameters are used to assess the efficiency and equity implications of the relevant tax law provisions.     

Housing unit maintenance and the mode of tenure

Empirical studies have demonstrated that owner-occupied housing units tend to be better maintained than rental units. This paper presents an economic model which explains the observations. It is shown that, under a set of perfect market assumptions, an owner-occupant will maintain his housing unit at a higher rate than will a landlord. The effects of changing tenure times, of changing incomes, and of transactions costs are analyzed and testable hypotheses are developed. While the model is applied only to housing, it is applicable to a wider class of durable goods which may either be rented or user owned.     

THE HOUSING STOCK,HOUSING PRICES,AND USER COSTS: THE ROLES OF LOCATION,STRUCTURE, AND UNOBSERVED QUALITY

Which housing characteristics are important for understanding homeownership rates? How are housing characteristics priced in rental and owner-occupied markets? What can answers to these questions tell us about economic theories of homeownership? Using the English Housing Survey, we estimate a selection model of property allocations to the owner-occupied and rental sectors. Structural characteristics and unobserved quality are important for selection. Location is not. Accounting for selection is important for rent-to-price ratio estimates and explains some puzzling correlations between rent-to-price ratios and homeownership rates. These patterns are consistent with, among others, hypotheses of rental market contracting frictions related to housing maintenance.     

Progressive Tax-Based Tenure Choice: A study of Korean Housing Rentals

In Korea, there exists a unique form of housing rental called the “Chun-Sae” (C.S.). The purpose of this paper is to provide a theoretical model for tax-based tenure choice between ownership and rental, to develop a model to evaluate the C.S. price, and to seek an explanation for the currently observed anomaly (i.e., a wide disparity between the present value of C.S. and the market price of house). The model is also found to be useful in evaluating the effectiveness of capital gain tax on a second house. [210]     

Differential income taxation and household asset allocation

This article empirically investigates the effects of differential income taxation on households’ portfolio choice and asset allocation, applying a two-stage budgeting model of asset demand to German survey data. The model is structured into the discrete and the continuous asset choice. Cross-sectional variation in marginal tax rates, appropriately instrumented, as well as over-time variation from a major tax reform are used to identify the tax effects. Households with higher tax rates are found to have relatively greater demand for tax-privileged assets, such as nonowner-occupied housing, mortgage repayments, building society deposits, stocks, insurances and consumer credits, than households with lower tax rates. Demand at higher tax rates is lower for owner-occupied housing, bank deposits and bonds.     

A Simple Model of Recent Changes in the Residential Property Market*

A simple model of the Australian residential property market incorporating two form of tenure, owner occupation and renting, is developed. While the supply of housing services is common to both tenures, the demands of tenants and owner occupiers are independent and separate. The equilibrium values of rental and house prices are determined simultaneously in the two sectors. The model is then used to qualitatively assess the likely effects on rents and house prices of some important elements of the September 1985 tax package.     

Credit constraints,inelastic supply,and the housing boom

In this paper, I develop a dynamic general equilibrium model to study the sensitivity of house price changes with respect to credit constraints. I find that house prices are sensitive to changes of the down payment requirements if owner-occupied houses and rental houses are inelastically supplied. I then use the model to evaluate the housing boom during the 1995–2005 time period. I find that, under the assumption that owner-occupied housing and rental housing cannot be converted to each other, the increase in real household income and the decline in down payment requirements can explain a large fraction of the observed house price and price–rent ratio changes during the 1995–2005 time period. However, the model fails to match the interest rate changes during the 1995–2005 period.     

THE TREATMENT OF “HOME OWNERSHIP” IN THE CPI*

This paper explores the imputed service price approach to the pricing of the services of consumer-owned-and-used durables in the construction of the consumer price index, using the services of owner-occupied housing as an illustration. A theoretical framework for analyzing this question is first developed. Certain practical problems are then discussed. The conceptual difficulty of constructing an appropriate rate of return on the basis of available data on interest rates and house prices, in the context of inflation, is explored. Two arguments are advanced that statistical agencies ought not to follow the imputed service price approach in pricing the services of owner-occupied dwellings and other consumer durables. On the one hand, nominal interest rates will, in any short period, reflect monetary policy and not any change in the money “rental” of owner-occupied houses. Second, movements in nominal interest rates will also reflect changes in the money price of pure consumption goods, as well as changes in the money price of houses. The argument is extended to other consumer durables and, in the limiting case, to monetary balances, and it is concluded that in all but trivial cases the application of the service price approach leads to price movements of little or no meaning.     

The Impact of Inflation and Taxation on Tenure Choice and the Redistributive Effects of Home-Mortgage Interest Rate ReguIation*

Judy Yates (1981) notes the regressive redistributive impact of home-mortgage interest rate regulation and offers some explanations. This paper provides an alternative explanation of Yates' observations in terms of the interaction of inflation with the current tax system in Australia. A model of tenure choice in the context of inflation and taxation is developed. In explaining this phenomenon, the model also establishes the regressive nature of the tax subsidy to owner-occupation. Home-mortgage interest rate regulation is then introduced. This reinforces the redistributive bias in the housing finance market. The model is used finally to predict the impact of deregulation. It is concluded that deregulation by itself can only remove redistributive bias resulting from regulated mortgage interest rates. Reform of the tax system is required to eliminate the regressive redistributive effects of the tax subsidy to owner-occupation .     

差别化房地产税收政策对住房消费的影响

我国住房交易税和试点中的房产税都是差别化的税收政策,差别化的交易税会减少购房消费,增加租赁消费,但可能会使住房价格上升,并增加新建住房消费比例,减少存量住房消费比例。房产税或物业税等差别化保有税的开征,将起到降低住房价格,减少购房消费和增加租赁消费的作用。而利率等货币政策也是调控我国房地产市场的一个非常有效的手段。     

You can take it with you: Proposition 13 tax benefits,residential mobility,and willingness to pay for housing amenities

The endogeneity of prices has long been recognized as the main identification problem in the estimation of marginal willingness to pay (MWTP) for the characteristics of a given product. This issue is particularly important in the housing market, since a number of housing and neighborhood features are unobserved by the econometrician. This paper proposes the use of a well defined type of transaction costs–moving costs generated by property tax laws–to deal with this type of omitted variable bias. California's Proposition 13 property tax law is the source of variation in transaction costs used in the empirical analysis. Beyond its fiscal consequences, Proposition 13 created a lock-in effect on housing choice because of the implicit tax break enjoyed by homeowners living in the same house for a long time. Its importance to homeowners is estimated from a natural experiment created by two amendments that allow households headed by an individual over the age of 55 to transfer the implicit tax benefit to a new home. Indeed, 55-year old homeowners have 25% higher moving rates than those of comparable 54 year olds. These transaction costs from the property tax laws are then incorporated into a household sorting model. The key insight is that because of the property tax laws, different potential buyers may have different user costs for the same house. The exogenous property tax component of this user cost is then used as an instrumental variable. I find that MWTP estimates for housing characteristics are approximately 100% upward biased when the choice model does not account for the price endogeneity.     

Rental housing for a French taxpayer: are there tax arbitrage opportunities in the USA?

The aim of this paper is to identify tax arbitrage opportunities in the field of rental housing in France and the USA. We conducted tax simulations for investments made in the USA or France. We compared total net rental incomes, capital gains and present investment values based on different tax regimes. Our results show that rental housing in the USA under the Effectively Connected Income classification serves as the best option, as it generates the highest present investment value. We performed several robustness exercises and we showed that our results are strengthened in cases of stronger price appreciation in the USA than in France and in cases of high landlord tax brackets.     

Behavior of Household Portfolios in France: the Role of Housing

The two-dimensional aspects of dwellings occupied by their owner, consumption and investment, make the analysis of households' portfolio choice and the analysis of housing purchases more difficult. But it seems difficult to analyze portfolio decisions without taking account of owner-occupied housing that has an important effect on wealth composition over the life cycle. In this paper we estimated a portfolio choice model where the different dwellings are defined as assets and we showed that we cannot separate investment decisions from housing consumption. Especially, risky assets demand should be greatly influenced by attitudes toward home property.     

Tax treatment of owner occupied housing and wealth inequality

We construct a quantitative general equilibrium lifecycle model with housing tenure decisions to investigate the degree to which wealth inequality in the United States is affected by the preferential tax treatment of home-ownership. Favorable tax treatment of owner occupied housing in the form of home mortgage interest and property tax deductibility, and the untaxed nature of imputed rents, provides a financial incentive for home-ownership over renting as well as an incentive to “over-consume” housing since houses are not fungible. Since the favorable tax treatment of housing disproportionately creates tax savings for the upper quantiles of the income distribution, we quantify how it contributes to the heavily right skewed distribution of wealth in the United States using data from the Survey of Consumer Finances. We consider a revenue-neutral government response to the counter factual experiments of removing the current tax structure on housing. Our quantitative analysis shows that, in terms of distributional effects, removing all of the preferential tax treatments results in an aggregate increase in welfare. However, we do not find any reduction in inequality. We also find that while some re-allocation toward financial assets occurs, households primarily increase their consumption when imputed housing rents are taxed and the property tax deduction is removed. Thus housing tax policy may be effective at encouraging more overall saving through housing assets.     

公共租赁房:我国保障性住房供应体系的核心

选择合适的住房保障模式是制度得以成功实施的关键.我国目前基本形成了以廉租房、公共租赁房、经济适用房为主的多层次保障性住房供应体系,虽然有一定的合理性,但也存在许多弊端,如制度内部分割形成“夹心层”、保障水平与收入水平倒置、加大地方政府管理难度等.借鉴国际经验,结合国内现实的分析结果显示公共租赁房成为我国保障性住房供应体系的核心是一种理性选择.     

Crowd out effects of place-based subsidized rental housing: New evidence from the LIHTC program

Since its inception in 1987, the Low Income Housing Tax Credit (LIHTC) program has ballooned into the largest ever source of subsidized construction of low-income housing in the United States, accounting for one-third of all recent multi-family rental construction. This paper examines the crowd out effects of this increasingly important source of low-moderate income housing. To do so, we analyze the impact of LIHTC construction at three different levels of geography, MSA, county, and 10-mile radius circles. This allows us to employ increasingly extensive geographic fixed effects that help to difference away unobserved factors. Political variables are also used as instruments to further facilitate identification.In all of our models, IV estimates yield substantially greater crowd out than OLS, confirming the endogenous attraction of LIHTC development to areas ripe for new construction. Our most robust IV estimates indicate that nearly 100% of LIHTC development is offset by a reduction in the number of newly built unsubsidized rental units, although the confidence band around this point estimate allows for less dramatic assessments. Additional estimates suggest that LIHTC development has a much more moderate impact on construction of owner-occupied housing, but these estimates are imprecise. Overall, while LIHTC development may well affect the location of low-moderate income rental housing opportunities, our estimates suggest that the impact of the program on the number of newly developed rental housing units appears to be small.     

增值税扩围改革有助于减轻服务业税负吗?——基于投入产出表的分析

增值税扩围改革对服务业行业流转税负担的影响同时包含"税率提高的增税效应"与"进项抵扣的减税效应"。利用投入产出表数据分析并测算增值税扩围改革影响各服务业行业流转税负变动的净效应,结果发现:不同服务业行业的税负变化情况差异较大,商务服务业等大多数行业的税负将减轻,但租赁业等部分行业的税负会加重,税改后的增值税税率水平选择与中间投入比率是影响服务业行业税负变动的主要因素。为了优化服务业发展的税收环境,使增值税扩围改革有助于减轻服务业的流转税负,应根据税负平衡点审慎选择服务业行业税改后适用的增值税税率。当前制定的租赁业、交通运输业的试点税率水平偏高,有必要予以降低。