Quotation Gjedsted Nielsen, Mads, Rzeznik, Aleksandra. 2016. House prices and taxes.


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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.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Working/discussion paper, preprint
Language English
Title House prices and taxes
Year 2016

Associations

People
Rzeznik, Aleksandra (Former researcher)
External
Gjedsted Nielsen, Mads (Nordea, Denmark)
Organization
Institute for Finance, Banking and Insurance IN (Details)
Research areas (ÖSTAT Classification 'Statistik Austria')
5361 Financial management (Details)
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