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Real Estate Prices and the Importance of Bequest Taxation


  • Giorgio Bellettini
  • Filippo Taddei


Taxation of bequests and donations is an important determinant of real estate prices. We show that, ceteris paribus, a decrease in taxes on inter vivos donations and bequests brings about an increase in real estate prices. We provide a general equilibrium rationalization in the context of OLG economies featuring intergenerational altruism. This has relevant policy implications. We test the predictions of our theory employing a unique policy shock: the abolition of bequest and donation taxation that took place in Italy in 2001. Considering this policy shift provides the first evidence that a drastic reduction in bequest and donation taxation significantly increased real estate prices. Our estimates suggest that the 2001 abolition of taxation on bequests and donations alone led to an appreciation of residential real estate in excess of 10%.

Suggested Citation

  • Giorgio Bellettini & Filippo Taddei, 2009. "Real Estate Prices and the Importance of Bequest Taxation," CESifo Working Paper Series 2577, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_2577

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    1. Bernheim, B. Douglas & Lemke, Robert J. & Scholz, John Karl, 2004. "Do estate and gift taxes affect the timing of private transfers?," Journal of Public Economics, Elsevier, vol. 88(12), pages 2617-2634, December.
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    5. Pelizzon, Loriana & Weber, Guglielmo, 2008. "Are Household Portfolios Efficient? an Analysis Conditional on Housing," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 43(02), pages 401-431, June.
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    7. Jonathan McCarthy & Richard Peach, 2004. "Are home prices the next "bubble"?," Economic Policy Review, Federal Reserve Bank of New York, issue Dec, pages 1-17.
    8. Edward L. Glaeser & Joseph Gyourko & Raven E. Saks, 2005. "Why Have Housing Prices Gone Up?," American Economic Review, American Economic Association, vol. 95(2), pages 329-333, May.
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    10. Carolina Fugazza & Massimo Guidolin & Giovanna Nicodano, 2007. "Investing for the Long-run in European Real Estate," The Journal of Real Estate Finance and Economics, Springer, vol. 34(1), pages 35-80, January.
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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


    real estate prices; donations; bequest taxation;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General


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