The long-term effects of capital gains taxes in New Zealand

Andrew Coleman

New Zealand Economic Papers, 2010, vol. 44, issue 2, pages 159-177

Abstract: This paper develops a model of the housing market to examine the long-term consequences of different types of capital gains taxes. The model, which uses an overlapping generations framework to model the housing demands of agents who differ by age, income, and wealth, incorporates rental and owner-occupancy options, credit constraints, detailed tax regulations, and a construction sector. It suggests capital gains taxes will raise rents, increase homeownership rates, promote smaller houses, and increase the net foreign asset position. The welfare implications are less clear, particularly for young low income households that will face higher rents.

Keywords: inflation; credit constraints; capital income taxes; housing markets; home-ownership rates; monetary policy (search for similar items in EconPapers)
Date: 2010
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