IDEAS home Printed from https://ideas.repec.org/p/ipt/taxref/201908.html
   My bibliography  Save this paper

Housing taxation: a new database for Europe

Author

Listed:

Abstract

Tax incentives favouring homeownership are widely used in developed economies. Homeownership is often thought to bring a number of positive contributions, from the promotion of households´ saving to enhanced community engagement. However, housing tax incentives are also considered as a major source of distortions for households´ decisions, especially in absence of taxation of in-kind services related to housing consumption (i.e. imputed rents) and in presence of mortgage interest payment deductibility. These distortions can have wide-ranging consequences for investment, consumption and public finances. Housing tax distortions have rarely been analysed from a cross-country perspective over time, however, not least because of the absence of comparable data and the difficulty to gather detailed information on the specific tax treatment of homeownership. In this paper we aim to fill this gap by providing comparable time series on the main features of housing taxation in European countries. Our database includes information on transfer taxes incurred when buying a house, implicit recurrent property taxes owed by households, capital gain taxes, imputed rent taxation and mortgage interest tax reliefs. The data is provided for the period 1995-2017 by the time of writing this paper and will be updated annually and made available at the following website: https://ec.europa.eu/jrc/en/thematic-research-fiscal-policy/housing-taxation. We use this data to estimate the user cost of owner-occupied housing (UCOH) following the approach proposed by Poterba, (1992) and Poterba and Sinai (2008), which provides a synthetic indicator on the distortions exerted by the tax system on households´ housing investment choices. A number of additional data used to calculate the UCOH indicator, such as maximum loan to value ratio and maximum loan duration, interest rate for long-term government bonds, interest income tax and house price are also provided.

Suggested Citation

  • Salvador Barrios & Cecile Denis & Viginta Ivaskaite-Tamosiune & Adriana Reut & Estefania Vazquez Torres, 2019. "Housing taxation: a new database for Europe," JRC Working Papers on Taxation & Structural Reforms 2019-08, Joint Research Centre (Seville site).
  • Handle: RePEc:ipt:taxref:201908
    as

    Download full text from publisher

    File URL: https://ec.europa.eu/jrc/sites/jrcsh/files/jrc118277.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Charles Himmelberg & Christopher Mayer & Todd Sinai, 2005. "Assessing High House Prices: Bubbles, Fundamentals and Misperceptions," Journal of Economic Perspectives, American Economic Association, vol. 19(4), pages 67-92, Fall.
    2. Jérôme Vandenbussche & Ursula Vogel & Enrica Detragiache, 2015. "Macroprudential Policies and Housing Prices: A New Database and Empirical Evidence for Central, Eastern, and Southeastern Europe," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(S1), pages 343-377, March.
    3. Gervais, Martin, 2002. "Housing taxation and capital accumulation," Journal of Monetary Economics, Elsevier, vol. 49(7), pages 1461-1489, October.
    4. Binner, Amy & Day, Brett, 2015. "Exploring mortgage interest deduction reforms: An equilibrium sorting model with endogenous tenure choice," Journal of Public Economics, Elsevier, vol. 122(C), pages 40-54.
    5. Serena Fatica & Doris Prammer, 2018. "Housing and the Tax System: How Large Are the Distortions in the Euro Area?," Fiscal Studies, John Wiley & Sons, vol. 39(2), pages 299-342, June.
    6. Antonia Diaz & Maria Jose Luengo Prado, 2008. "On the User Cost and Homeownership," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(3), pages 584-613, July.
    7. repec:taf:intjhp:v:13:y:2013:i:1:p:37-54 is not listed on IDEAS
    8. Fritzsche, Carolin & Vandrei, Lars, 2019. "The German real estate transfer tax: Evidence for single-family home transactions," Regional Science and Urban Economics, Elsevier, vol. 74(C), pages 131-143.
    9. Michael Carlos Best & Henrik Jacobsen Kleven, 2018. "Housing Market Responses to Transaction Taxes: Evidence From Notches and Stimulus in the U.K," Review of Economic Studies, Oxford University Press, vol. 85(1), pages 157-193.
    10. European Commission, 2014. "Tax reforms in EU Member States - 2014 Report," Taxation Papers 48, Directorate General Taxation and Customs Union, European Commission.
    11. Alpanda, Sami & Zubairy, Sarah, 2017. "Addressing household indebtedness: Monetary, fiscal or macroprudential policy?," European Economic Review, Elsevier, vol. 92(C), pages 47-73.
    12. Cho, Sang-Wook (Stanley) & Francis, Johanna L., 2011. "Tax treatment of owner occupied housing and wealth inequality," Journal of Macroeconomics, Elsevier, vol. 33(1), pages 42-60, March.
    13. Tim Callan, 1992. "Taxing imputed income from owner-occupation: distributional implications of alternative packages," Fiscal Studies, Institute for Fiscal Studies, vol. 13(4), pages 58-70, November.
    14. 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.
    15. James M. Poterba, 1992. "Taxation and Housing Markets," NBER Chapters, in: Canada-U.S. Tax Comparisons, pages 275-294, National Bureau of Economic Research, Inc.
    16. Kelly, Jane & Le Blanc, Julia & Lydon, Reamonn, 2018. "Pockets of risk in European Housing Markets: then and now," Research Technical Papers 12/RT/18, Central Bank of Ireland.
    17. James M. Poterba, 1984. "Tax Subsidies to Owner-Occupied Housing: An Asset-Market Approach," The Quarterly Journal of Economics, Oxford University Press, vol. 99(4), pages 729-752.
    18. Peter Englund, 2003. "Taxing Residential Housing Capital," Urban Studies, Urban Studies Journal Limited, vol. 40(5-6), pages 937-952, May.
    19. Poterba, James M, 1992. "Taxation and Housing: Old Questions, New Answers," American Economic Review, American Economic Association, vol. 82(2), pages 237-242, May.
    20. Jens Matthias Arnold & Bert Brys & Christopher Heady & Åsa Johansson & Cyrille Schwellnus & Laura Vartia, 2011. "Tax Policy for Economic Recovery and Growth," Economic Journal, Royal Economic Society, vol. 121(550), pages 59-80, February.
    21. Spengel, Christoph & Endres, Dieter & Finke, Katharina & Heckemeyer, Jost, 2014. "Effective tax levels using the DEVEREUX/GRIFFITH methodology: Project for the EU Commission TAXUD/2013/CC/120," ZEW Expertises, ZEW - Leibniz Centre for European Economic Research, number 111463, March.
    22. Patric H. Hendershott & Joel Slemrod, 1982. "Taxes and the User Cost of Capital for Owner‐Occupied Housing," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 10(4), pages 375-393, December.
    23. DiPasquale, Denise & Wheaton, William C., 1992. "The cost of capital, tax reform, and the future of the rental housing market," Journal of Urban Economics, Elsevier, vol. 31(3), pages 337-359, May.
    24. Job Swank & Jan Kakes & Alexander F. Tieman, 2002. "The housing ladder, taxation, and borrowing constraints," MEB Series (discontinued) 2002-9, Netherlands Central Bank, Monetary and Economic Policy Department.
    25. Skinner, Jonathan, 1996. "The dynamic efficiency cost of not taxing housing," Journal of Public Economics, Elsevier, vol. 59(3), pages 397-417, March.
    26. Berkovec, James & Fullerton, Don, 1992. "A General Equilibrium Model of Housing, Taxes, and Portfolio Choice," Journal of Political Economy, University of Chicago Press, vol. 100(2), pages 390-429, April.
    27. James Poterba & Todd Sinai, 2008. "Tax Expenditures for Owner-Occupied Housing: Deductions for Property Taxes and Mortgage Interest and the Exclusion of Imputed Rental Income," American Economic Review, American Economic Association, vol. 98(2), pages 84-89, May.
    28. Kristof Heylen, 2013. "The distributional impact of housing subsidies in Flanders," International Journal of Housing Policy, Taylor & Francis Journals, vol. 13(1), pages 45-65, March.
    29. Raymond Y.C. Tse & James R. Webb, 1999. "Property Tax and Housing Returns," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 11(2), pages 114-126, July.
    30. Salvador Barrios & Pietro Rizza, 2010. "Unexpected changes in tax revenues and the stabilisation function of fiscal policy. Evidence for EU," European Economy - Economic Papers 2008 - 2015 404, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    31. Hall, Robert E & Jorgenson, Dale W, 1969. "Tax Policy and Investment Behavior: Reply and Further Results," American Economic Review, American Economic Association, vol. 59(3), pages 388-401, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Martin, Carolin & Schmitt, Noemi & Westerhoff, Frank, 2021. "Heterogeneous expectations, housing bubbles and tax policy," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 555-573.
    2. Michal Brzezinski & Katarzyna Salach, 2020. "Why wealth inequality differs between post-socialist countries?," Working Papers 551, ECINEQ, Society for the Study of Economic Inequality.
    3. Martin, Carolin & Schmitt, Noemi & Westerhoff, Frank, 2021. "Heterogeneous expectations, housing bubbles and tax policy," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 555-573.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Martin, Carolin & Schmitt, Noemi & Westerhoff, Frank, 2021. "Heterogeneous expectations, housing bubbles and tax policy," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 555-573.
    2. Goeyvaerts, Geert & Buyst, Erik, 2019. "Do market rents reflect user costs?," Journal of Housing Economics, Elsevier, vol. 44(C), pages 112-130.
    3. Essi Eerola & Niku Määttänen, 2013. "The Optimal Tax Treatment of Housing Capital in the Neoclassical Growth Model," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 15(6), pages 912-938, December.
    4. Wenli Li & Edison Yu, . "Real Estate Taxes and Home Value: Evidence from TCJA," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.
    5. Serena Fatica & Doris Prammer, 2018. "Housing and the Tax System: How Large Are the Distortions in the Euro Area?," Fiscal Studies, John Wiley & Sons, vol. 39(2), pages 299-342, June.
    6. Erlend Eide Bø, 2020. "Taxation of Housing: Killing Several Birds with One Stone," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 66(3), pages 534-557, September.
    7. Poterba, James M. & Sinai, Todd, 2011. "Revenue Costs and Incentive Effects of the Mortgage Interest Deduction for Owner-Occupied Housing," National Tax Journal, National Tax Association;National Tax Journal, vol. 64(2), pages 531-564, June.
    8. Figari, Francesco & Paulus, Alari & Sutherland, Holly & Tsakloglou, Panos & Verbist, Gerlinde & Zantomio, Francesca, 2012. "Taxing Home Ownership: Distributional Effects of Including Net Imputed Rent in Taxable Income," IZA Discussion Papers 6493, Institute of Labor Economics (IZA).
    9. Antonia Diaz & Maria Jose Luengo Prado, 2008. "On the User Cost and Homeownership," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(3), pages 584-613, July.
    10. Edward L. Glaeser & Joseph Gyourko, 2006. "Housing Dynamics," NBER Working Papers 12787, National Bureau of Economic Research, Inc.
    11. 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.
    12. Andrew Hanson & Hal Martin, 2014. "Housing Market Distortions and the Mortgage Interest Deduction," Public Finance Review, , vol. 42(5), pages 582-607, September.
    13. Garner, Thesia I. & Verbrugge, Randal, 2009. "Reconciling user costs and rental equivalence: Evidence from the US consumer expenditure survey," Journal of Housing Economics, Elsevier, vol. 18(3), pages 172-192, September.
    14. Piazzesi, M. & Schneider, M., 2016. "Housing and Macroeconomics," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 1547-1640, Elsevier.
    15. Hott, Christian, 2015. "A model of mortgage losses and its applications for macroprudential instruments," Journal of Financial Stability, Elsevier, vol. 16(C), pages 183-194.
    16. James M. Poterba & Todd M. Sinai, 2008. "Income Tax Provisions Affecting Owner-Occupied Housing: Revenue Costs and Incentive Effects," NBER Working Papers 14253, National Bureau of Economic Research, Inc.
    17. Dieci, Roberto & Westerhoff, Frank, 2016. "Heterogeneous expectations, boom-bust housing cycles, and supply conditions: A nonlinear economic dynamics approach," Journal of Economic Dynamics and Control, Elsevier, vol. 71(C), pages 21-44.
    18. Saarimaa, Tuukka & Kortelainen, Mika, 2012. "Do homeowners benefit urban neighborhoods? Evidence from housing prices," Working Papers 36, VATT Institute for Economic Research.
    19. Sommer, Kamila & Sullivan, Paul & Verbrugge, Randal, 2013. "The equilibrium effect of fundamentals on house prices and rents," Journal of Monetary Economics, Elsevier, vol. 60(7), pages 854-870.
    20. Anderson, John E. & Roy, Atrayee Ghosh, 2001. "Eliminating Housing Tax Preferences: A Distributional Analysis," Journal of Housing Economics, Elsevier, vol. 10(1), pages 41-58, March.

    More about this item

    Keywords

    Housing taxation; database; user costs of housing; transfer tax; capital gains tax; mortgage interest tax relief; recurrent property tax; imputed rent taxation;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ipt:taxref:201908. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/ipjrces.html .

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Publication Officer (email available below). General contact details of provider: https://edirc.repec.org/data/ipjrces.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.