Property Taxes and Housing Allocation Under Financial Constraints

Joshua Coven, Sebastian Golder, Arpit Gupta and Abdoulaye Ndiaye

No 35587, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Low property taxes amplify lock-in among elderly homeowners, limiting housing access for young families. Raising them reallocates housing toward the young through two channels: capitalization into lower prices reduces required downpayments for financially constrained buyers, a form of embedded leverage, while higher tax obligations raise holding costs for older owners. In our overlapping generations model, raising California’s property taxes to Texas levels increases young homeownership while decreasing elderly homeownership. Removing step-up basis also lowers elderly homeownership, suggesting their tenure is sustained by bequest tax advantages. The tax treatment of housing shapes housing allocation across generations.

JEL-codes: H24 H71 J11 R21 (search for similar items in EconPapers)
Date: 2026-08
Note: AG PE
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w35587.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
Working Paper: Property Taxes and Housing Allocation Under Financial Constraints (2024)
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:nbr:nberwo:35587

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w35587
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().