Trading and the Tax Shelter Value of Depreciable Real Estate
AbstractFor well-diversified investors in depreciable real estate, the trading decision may be made with the sole objective of maximizing the property's depreciation tax shelter net of all capital gain taxes and transaction costs.This paper develops a dynamic programming model in which the optimal trading strategies and depreciation methods of all investors in a property are simultaneously determined. The effects of inflation, depreciation, recapture and choice of depreciation method are analyzed, and the costs of suboptimal trading are measured. The model is applied to both conventional residential and commercial income properties under post-ERTA tax rules. At single digitinflation rates, properties are traded multiple times, and the costs of suboptimal trading are significant.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 1267.
Date of creation: Oct 1984
Date of revision:
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Patric H. Hendershott & David C. Ling, 1984.
"Prospective Changes in Tax Law and the Value of Depreciable Real Estate,"
Real Estate Economics,
American Real Estate and Urban Economics Association, vol. 12(3), pages 297-317.
- Patric H. Hendershott & David C. Ling, 1985. "Prospective Changes in Tax Law and the Value of Depreciable Real Estate," NBER Working Papers 1352, National Bureau of Economic Research, Inc.
- Winston T.H. Koh & Edward H.K. Ng, 2004.
"Investing in Real Estate: Mortgage Financing Practices and Optimal Holding Period,"
International Real Estate Review,
Asian Real Estate Society, vol. 7(1), pages 71-97.
- Winston T.H. Koh & Edward H.K. Ng, 2005. "Investing in Real Estate : Mortgage Financing Practices and Optimal Holding Period," Finance Working Papers 22457, East Asian Bureau of Economic Research.
- Winston T.H. Koh & Edward H.K. Ng, 2005. "Investing in Real Estate: Mortgage Financing Practices and Optimal Holding Period," Working Papers 03-2005, Singapore Management University, School of Economics.
- Follain, James R. & Ondrich, Jan & Sinha, Gyan P., 1997. "Ruthless Prepayment? Evidence from Multifamily Mortgages," Journal of Urban Economics, Elsevier, vol. 41(1), pages 78-101, January.
- Wayne Archer & David Ling & Brent C Smith, 2010. "Ownership Duration in the Residential Housing Market: The Influence of Structure, Tenure, Household and Neighborhood Factors," The Journal of Real Estate Finance and Economics, Springer, vol. 40(1), pages 41-61, January.
- Jeffrey D. Fisher & George H. Lentz & K.S. Maurice Tse, 1992. "Valuation of the Effects of Asbestos on Commercial Real Estate," Journal of Real Estate Research, American Real Estate Society, vol. 7(3), pages 331-350.
- Roger H. Gordon & James R. Hines Jr. & Lawrence H. Summers, 1987.
"Notes on the Tax Treatment of Structures,"
NBER Working Papers
1896, National Bureau of Economic Research, Inc.
- Cheng, Ping & Lin, Zhenguo & Liu, Yingchun, 2010. "Illiquidity, transaction cost, and optimal holding period for real estate: Theory and application," Journal of Housing Economics, Elsevier, vol. 19(2), pages 109-118, June.
- James M. Poterba, 1991. "Taxation and Housing Markets: Preliminary Evidence on the Effects of Recent Tax Reforms," NBER Working Papers 3270, National Bureau of Economic Research, Inc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.