Effects of Preferential Tax Treatment on German Homeownership

Stefanie Braun

No 209, Working Papers from Bavarian Graduate Program in Economics (BGPE)

Abstract: The paper analyzes the effects of mortgage interest deductibility and untaxed imputed rental income on the German homeownership. I use a general equilibrium life-cycle framework, where a minimum down-payment constraint on purchases of housing capital is the critical element of the model framework. I find that both tax policies would increase Germany's low homeownership rate. However, these tax policies would entail substantial welfare losses for individuals of all income quintiles in the long run. Finally, wealth e ects are relatively small and the welfare analysis shows that individuals would prefer to live in an economy without preferential tax treatment of housing.

Keywords: German homeownership rate; Housing taxation; Imputed rents; Mortgage deductibility; Capital accumulation (search for similar items in EconPapers)
JEL-codes: E62 H3 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2021-06
New Economics Papers: this item is included in nep-dge, nep-eur, nep-mac, nep-pbe and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://bgpe.cms.rrze.uni-erlangen.de/files/2023/0 ... an-Homeownership.pdf First version, 2021 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bav:wpaper:209_braun

Access Statistics for this paper

More papers in Working Papers from Bavarian Graduate Program in Economics (BGPE) Contact information at EDIRC.
Bibliographic data for series maintained by Anton Barabasch ().