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Price and Quantity Effects of the German Real Estate Transfer Tax

Petkova, Kunka and Weichenrieder, Alfons (2017) Price and Quantity Effects of the German Real Estate Transfer Tax. WU International Taxation Research Paper Series, 2017-07. WU Vienna University of Economics and Business, Universität Wien, Vienna.

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Abstract

This paper analyzes the tax effects of the German real estate transfer tax (RETT). While the vast majority of single-family houses in Germany are owner-occupied, apartments are usually held by private and incorporated investors. For this reason, we conducted a regression analysis to determine the effects of increasing RETT on the number and the prices of transactions separately for these two market segments. Our findings suggest that increasing the RETT by 1% is associated with a decline in transactions by 0.23% for single-family houses, but with no significant effect on the prices of traded houses. Conversely, for apartments, we find no significantly negative effects on the transactions, but the price effect of the RETT tends to be negative. Finally, for vacant lots, we find even larger quantity effects than for singlefamily houses suggesting roughly an elasticity of -1. The results for this specific market segment indicate that the government operates near the top of a Laffer curve.

Item Type: Paper
Additional Information: Financial support by the Austrian Science Fund (FWF): W1235-G16 is gratefully acknowledged. Editors: Eva Eberhartinger, Michael Lang, Rupert Sausgruber and Martin Zagler (Vienna University of Economics and Business), and Erich Kirchler (University of Vienna)
Keywords: real estate transaction tax, stamp duty, housing market, taxation, financial transaction tax
Classification Codes: JEL H24, R21
Depositing User: ePub Administrator
Date Deposited: 21 Jun 2017 10:34
Last Modified: 04 Sep 2017 12:07
URI: http://epub.wu.ac.at/id/eprint/5599

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