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Capital gains taxation and house price fluctuations

Author

Listed:
  • Fuest, Clemens

    (Department of Economics, Copenhagen Business School)

  • Huber, Bernd

    (Department of Economics, Copenhagen Business School)

  • Nielsen, Søren Bo

    (Department of Economics, Copenhagen Business School)

Abstract

Recent years have seen large swings in house prices in many countries. Motivated by housing price variations, proposals for taxing capital gains on housing have repeatedly been put forth. The idea seems to be that such taxes would curb the redistribution occurring between those owning houses and those trying to get into the market for owner-occupied housing. Our paper shows that at least in simple settings, a tax on real capital gains on housing will only lead to even bigger price swings and will not be able to redistribute between people appearing on either side of the housing market.

Suggested Citation

  • Fuest, Clemens & Huber, Bernd & Nielsen, Søren Bo, 2006. "Capital gains taxation and house price fluctuations," Working Papers 16-2004, Copenhagen Business School, Department of Economics.
  • Handle: RePEc:hhs:cbsnow:2004_016
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    File URL: http://openarchive.cbs.dk/cbsweb/handle/10398/7640
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    Cited by:

    1. P. Arestis & A.R. González, 2014. "Modelling the housing market in OECD countries," International Review of Applied Economics, Taylor & Francis Journals, vol. 28(2), pages 131-153, March.
    2. Nicole Aregger & Martin Brown & Enzo Rossi, 2013. "Transaction Taxes, Capital Gains Taxes and House Prices," Working Papers 2013-02, Swiss National Bank.
    3. Boysen-Hogrefe, Jens & Gern, Klaus-Jürgen & Groll, Dominik & Jannsen, Nils & Kooths, Stefan & Plödt, Martin & Schwarzmüller, Tim & van Roye, Björn & Scheide, Joachim, 2014. "Finanz- und Wirtschaftspolitik bei einer anhaltenden monetären Expansion," Kieler Beiträge zur Wirtschaftspolitik 5, Kiel Institute for the World Economy (IfW).

    More about this item

    Keywords

    capital gains tax; housing market; price fluctuations;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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