Real Estate Values, Federal Income Taxation, and the Importance of Local Market Conditions
Abstract
This article develops an income property valuation model that explicitly incorporates the effects of local market conditions. In particular, the model allows real rents to respond to a change in tax law, or to any exogenous shock to the system, with the dynamics of the rent change over time dependent upon current local supply and demand conditions and on the expected rate of economic growth in the local economy. Application of the model to an analysis of reduced capital gain taxation demonstrates that a partial reversal of TRA86's real estate provisions would disproportionately benefit those markets, and related lending institutions, which are most in need of a bolstering of real estate values. Copyright American Real Estate and Urban Economics Association.Download Info
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Bibliographic Info
Article provided by American Real Estate and Urban Economics Association in its journal Real Estate Economics.
Volume (Year): 20 (1992)
Issue (Month): 1 ()
Pages: 125-139
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Patric H. Hendershott, .
"Uses of Equilibrium Models in Real Estate Research,"
Research in Financial Economics
9612, Ohio State University.
- Patric H. Hendershott, 1997. "Uses of equilibrium models in real estate research," Journal of Property Research, Taylor and Francis Journals, vol. 14(1), pages 1-13, January.
- Wood, Gavin A., 2001. "Are There Tax Arbitrage Opportunities in Private Rental Housing Markets?," Journal of Housing Economics, Elsevier, vol. 10(1), pages 1-20, March.
- Dixie M. Blackley & James R. Follain, 1995. "In Search of Empirical Evidence that Links Rent and User Cost," NBER Working Papers 5177, National Bureau of Economic Research, Inc.
- Blackley, Dixie M. & Follain, James R., 1996. "In search of empirical evidence that links rent and user cost," Regional Science and Urban Economics, Elsevier, vol. 26(3-4), pages 409-431, June.
- Patric H. Hendershott, 1994. "Rental Adjustment & Valuation of Real Estate in Overbuilt Markets: Fundamental vs. Reported Office Market Values in Sydney Australia," NBER Working Papers 4775, National Bureau of Economic Research, Inc.
- Harter-Dreiman, Michelle, 2004. "Drawing inferences about housing supply elasticity from house price responses to income shocks," Journal of Urban Economics, Elsevier, vol. 55(2), pages 316-337, March.
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