The effects of land transfer taxes on real estate markets: Evidence from a natural experiment in Toronto
AbstractTaxes levied on the sale or purchase of real estate are pervasive but little studied. By exploiting a natural experiment arising from Torontoâ€™s imposition of a Land Transfer Tax (LTT) in early 2008, we estimate the impact of real estate transfer taxes on the market for single family homes. Our data show that Torontoâ€™s 1.1% tax caused a 15% decline in the number of sales and a decline in housing prices about equal to the tax. Relative to an equivalent property tax, the associated welfare loss is substantial, about $ 1 for every $ 8 in tax revenue. The magnitude of this welfare loss is comparable to those associated with better known interventions in the housing market. Unlike many possible tax reforms, eliminating existing LTTs in favour of revenue equivalent property taxes appears straightforward.
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 University of Toronto, Department of Economics in its series Working Papers with number tecipa-423.
Length: 30 pages
Date of creation: 14 Feb 2011
Date of revision:
Contact details of provider:
Postal: 150 St. George Street, Toronto, Ontario
Phone: (416) 978-5283
Land transfer tax; property tax; land regulation;
Other versions of this item:
- Ben Dachis & Gilles Duranton & Matthew A. Turner, 2012. "The effects of land transfer taxes on real estate markets: evidence from a natural experiment in Toronto," Journal of Economic Geography, Oxford University Press, vol. 12(2), pages 327-354, March.
- R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
- R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies
This paper has been announced in the following NEP Reports:
- NEP-ACC-2011-02-26 (Accounting & Auditing)
- NEP-AGR-2011-02-26 (Agricultural Economics)
- NEP-ALL-2011-02-26 (All new papers)
- NEP-PBE-2011-02-26 (Public Economics)
- NEP-URE-2011-02-26 (Urban & Real Estate Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jos van Ommeren & Michiel van Leuvensteijn, 2002.
"New Evidence of the Effect of Transaction Costs on Residential Mobility,"
Tinbergen Institute Discussion Papers
02-117/3, Tinbergen Institute.
- Jos Van Ommeren & Michiel Van Leuvensteijn, 2005. "New Evidence of the Effect of Transaction Costs on Residential Mobility," Journal of Regional Science, Wiley Blackwell, vol. 45(4), pages 681-702.
- Jos Van Ommeren & Michiel van Leuvensteijn, 2003. "New evidence of the effect of transaction costs on residential mobility," ERSA conference papers ersa03p7, European Regional Science Association.
- Michiel van Leuvensteijn & J. van Ommeren, 2003. "New evidence of the effect of transaction costs on residential mobility," CPB Discussion Paper 18, CPB Netherlands Bureau for Economic Policy Analysis.
- Guido de Blasio & Samuele Poy, 2014. "The impact of local minimum wages on employment: evidence from Italy in the 1950s," Temi di discussione (Economic working papers) 953, Bank of Italy, Economic Research and International Relations Area.
- Teemu Lyytikäinen & Hilber & A. L. Christian, 2013.
"Housing transfer taxes and household mobility: Distortion on the housing or labour market?,"
47, Government Institute for Economic Research Finland (VATT).
- Christian A. L. Hilber & Teemu Lyytikäinen, 2012. "The Effect of the UK Stamp Duty Land Tax on Household Mobility," SERC Discussion Papers 0115, Spatial Economics Research Centre, LSE.
- Arne Feddersen & Wolfgang Maennig, 2010.
"Sectoral Labour Market Effects of the 2006 FIFA World Cup,"
033, Chair for Economic Policy, University of Hamburg.
- Feddersen, Arne & Maennig, Wolfgang, 2012. "Sectoral labour market effects of the 2006 FIFA World Cup," Labour Economics, Elsevier, vol. 19(6), pages 860-869.
- Arne Feddersen & Wolfgang Maennig, 2013.
"Mega-Events And Sectoral Employment: The Case Of The 1996 Olympic Games,"
Contemporary Economic Policy,
Western Economic Association International, vol. 31(3), pages 580-603, 07.
- Arne Feddersen & Wolfgang Maennig, 2010. "Mega-Events and Sectoral Employment: The Case of the 1996 Olympic Games," Working Papers 035, Chair for Economic Policy, University of Hamburg.
- Davidoff, Ian & Leigh, Andrew, 2013.
"How Do Stamp Duties Affect the Housing Market?,"
IZA Discussion Papers
7463, Institute for the Study of Labor (IZA).
- Steve Gibbons & Max Nathan & Henry G. Overman, 2014. "Evaluating Spatial Policies," SERC Policy Papers 012, Spatial Economics Research Centre, LSE.
- Albert Solé-Ollé & Elisabet Viladecans-Marsal, 2011. "Local spending and the housing boom," Working Papers 2011/27, Institut d'Economia de Barcelona (IEB).
- Gabriel M. Ahfeldt & Wolfgang Maennig & Felix J. Richter, 2013.
"Urban Renewal after the Berlin Wall,"
SERC Discussion Papers
0151, Spatial Economics Research Centre, LSE.
- Gabriel Ahlfeldt & Wolfgang Maennig & Felix J. Richter, 2013. "Urban Renewal after the Berlin Wall," CESifo Working Paper Series 4506, CESifo Group Munich.
- Gabriel M. Ahlfeldt & Wolfgang Maennig & Felix J. Richter, 2013. "Urban Renewal after the Berlin Wall," Working Papers 049, Chair for Economic Policy, University of Hamburg.
- Richter, Felix & Ahlfeldt, Gabriel & Maennig, Wolfgang, 2013. "Urban renewal after the Berlin Wall," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79789, Verein für Socialpolitik / German Economic Association.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (RePEc Maintainer).
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.