Who Bears the Burden of Real Estate Transfer Taxes? Evidence from the German Housing Market

Clemens Fuest, Mathias Dolls, Carla Krolage and Florian Neumeier ()

No 308, ifo Working Paper Series from ifo Institute - Leibniz Institute for Economic Research at the University of Munich

Abstract: This paper examines the effects of real estate transfer taxes (RETT) on property prices using a rich micro dataset of roughly 17 million German properties for the period from 2005 to 2019. We exploit a 2006 constitutional reform that allows states to set their own RETT rates, leading to frequent increases in states’ tax rates in the subsequent years. Our monthly event study estimates indicate a price response that strongly exceeds the change in the tax burden for single transactions. Twelve months after a reform, a one percentage point increase in the tax rate reduces property prices by on average 3%. Effects are stronger for apartments and apartment buildings than for single-family houses. Moreover, negative price effects are predominantly found in growing housing market regions. Our results can be rationalized by a theoretical model that predicts larger price responses in sellers’ markets and for properties with a high transaction frequency.

Keywords: Real estate transfer taxes; property taxes; housing market (search for similar items in EconPapers)
JEL-codes: H22 H71 R32 R38 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-eur, nep-pbe, nep-pub and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Who bears the burden of real estate transfer taxes? Evidence from the German housing market (2025)
Working Paper: Who Bears the Burden of Real Estate Transfer Taxes? Evidence from the German Housing Market (2024)
Working Paper: Who Bears the Burden of Real Estate Transfer Taxes? Evidence from the German Housing Market (2021)
Working Paper: Who Bears the Burden of Real Estate Transfer Taxes? Evidence from the German Housing Market (2020)
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