Tenure Decisions Under a Progressive Tax Structure

Stephen A. Buser and Anthony B. Sanders

Real Estate Economics, 1983, vol. 11, issue 3, 371-381

Abstract: Although certain provisions of the federal tax code provide subsidies to homeowners, others provide subsidies to renters in the form of tax incentives for investments in rental housing. We demonstrate that the renter subsidies dominate for households in low tax brackets whereas homeowner subsidies dominate for households in high tax brackets. Moreover the dollar magnitude involved in the tenure decision can easily push a household across tax brackets. Based on this relation, we identify an upper bound on the value of a dwelling that a household with a given income will prefer to own rather than rent for tax purposes. If the household were to choose a dwelling valued in excess of this household‐specific upper bound, the tax effect would reverse and favor renting. This complication provides a possible explanation for apparent tax anomalies in tenure decisions, i.e., high income renters and/or low income homeowners.

Date: 1983
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://doi.org/10.1111/1540-6229.00296

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:bla:reesec:v:11:y:1983:i:3:p:371-381

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1080-8620

Access Statistics for this article

Real Estate Economics is currently edited by Crocker Liu, N. Edward Coulson and Walter Torous

More articles in Real Estate Economics from American Real Estate and Urban Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().