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Real Estate Prices and the Importance of Bequest Taxation

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  • Giorgio Bellettini
  • Filippo Taddei

Abstract

In the context of a general equilibrium model with overlapping generations and intergenerational altruism we show that, ceteris paribus, a decrease in taxes on inter vivos donations and bequests brings about an increase in real estate prices. This result has relevant policy implications. We test the predictions of our theory exploiting the abolition of bequest and donation taxation that took place in Italy in 2001. We implement this test by using an original and unique dataset on sales, donations and real estate prices for 13 italian cities between 1993 and 2004. Our estimates suggest that, controlling for other explanatory variables, the 2001 abolition of taxation on bequests and donations contributed substantially to the appreciation of Italian residential real estate.

Suggested Citation

  • Giorgio Bellettini & Filippo Taddei, 2009. "Real Estate Prices and the Importance of Bequest Taxation," Carlo Alberto Notebooks 107, Collegio Carlo Alberto, revised 2011.
    • Handle: RePEc:cca:wpaper:107
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    References listed on IDEAS

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    Cited by:

    1. Theodore Panagiotidis & Panagiotis Printzis, 2016. "On the macroeconomic determinants of the housing market in Greece: a VECM approach," International Economics and Economic Policy, Springer, vol. 13(3), pages 387-409, July.
    2. Jappelli, Tullio & Padula, Mario & Pica, Giovanni, 2010. "Estate Taxation and Intergenerational Transfers," CEPR Discussion Papers 7701, C.E.P.R. Discussion Papers.
    3. Norifumi Yukutake & Shinichiro Iwata & Takako Idee, 2011. "Strategic Interaction between Inter Vivos Gifts and Housing Acquisition," Global COE Hi-Stat Discussion Paper Series gd11-201, Institute of Economic Research, Hitotsubashi University.
    4. Elek, Péter & Kiss, Áron, 2010. "Az ingatlanadó a magyar adórendszerben. Elméleti megfontolások és mikroszimulációs elemzés
      [Real-estate taxation in the Hungarian tax system. Theoretical considerations and a micro-simulation analy      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 389-411.

    More about this item

    Keywords

    bequest tax; donations; real estate;

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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