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Housing and Tax Capitalisation

Author

Listed:
  • Michael Barrow

    (School of Social Sciences, University of Sussex)

  • Ray Robinson

    (School of Social Sciences, University of Sussex)

Abstract

This paper examines the effect of the tax treatment of owner occupied housing upon its price, commonly known as the capitalisation effect, and looks at how this has a differential impact upon distinct groups in the housing market. These groups are existing outright owners, existing owners with mortgages, potential purchasers and tenants. It is shown how gains and losses due to the tax treatment of owner occupied housing are distributed amongst these categories, and how they might be realised. Illustrative calculations are presented for each group. The paper shows how the process of capitalisation can exacerbate the unequal treatment of owner-occupiers and tenants and thus presents an argument for the withdrawal of the favourable tax treatment of owner-occupied housing. The problems for the different groups that this change would imply are also discussed.

Suggested Citation

  • Michael Barrow & Ray Robinson, 1986. "Housing and Tax Capitalisation," Urban Studies, Urban Studies Journal Limited, vol. 23(1), pages 61-66, February.
    • Handle: RePEc:sae:urbstu:v:23:y:1986:i:1:p:61-66
    DOI: 10.1080/00420988620080061
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    References listed on IDEAS

    as
    1. G A Hughes, 1979. "Housing Income and Subsidies," Fiscal Studies, Institute for Fiscal Studies, vol. 1(1), pages 20-38, November.
    2. Judith Yates, 1982. "An Analysis of the Distributional Impact of Imputed Rent Taxation," The Economic Record, The Economic Society of Australia, vol. 58(2), pages 177-189, June.
    3. Whitley, J. D., 1974. "Mortgages: The Case for Index-Linking," National Institute Economic Review, National Institute of Economic and Social Research, vol. 70, pages 75-79, November.
    4. Yates, Judith, 1982. "An Analysis of the Distributional Impact of Imputed Rent Taxation," The Economic Record, The Economic Society of Australia, vol. 58(161), pages 177-189, June.
    5. Robinson, Ray, 1981. "Housing Tax-Expenditures, Subsidies and the Distribution of Income," The Manchester School of Economic & Social Studies, University of Manchester, vol. 49(2), pages 91-110, June.
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    Cited by:

    1. Judith Yates, 1989. "Housing Policy Reform: A Constructive Critique," Urban Studies, Urban Studies Journal Limited, vol. 26(4), pages 419-433, August.

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