Who Bears the Burden of Real Estate Transfer Taxes? Evidence from the German Housing Market
Year: 2024
Type: conference-paper
Abstract: This paper examines the effects of real estate transfer taxes (RETT) on property prices using a rich micro dataset of roughly 17 million German properties for the period from 2005 to 2019.Our empirical analysis exploits variation in RETT rate hikes across German states and over time.Our monthly event study estimates indicate a price response that strongly exceeds the change in the tax burden for single transactions.Twelve months after a reform, a one percentage point increase in the tax rate reduces property prices by on average 3%.Price effects are larger for apartments (-4%) than for singlefamily houses (-2%).Exploring potential mechanisms, we provide evidence that different holding periods are the main driver of the differential price effect between property types.Moreover, effects are stronger in counties where properties sell quickly and price discounts are small as well as in growing housing market regions.Our results can be rationalized by a theoretical model that predicts larger price responses in sellers' markets and for properties with a high transaction frequency.
Source: Econstor (Econstor)
Language: English
Topic: Housing Market and Economics
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3126567983