Property Tax Policy and Housing Affordability

Emily Horton, Cameron LaPoint, Byron Lutz, Nathan Seegert and Jared Walczak

National Tax Journal, 2024, vol. 77, issue 4, 861 - 901

Abstract: We examine property tax reduction as a tool for increasing housing affordability. Analyzing various tax reduction policies through the lens of property tax incidence reveals a complex relationship between affordability and property taxes, with differential effects across demographic groups. Many policies often fail to improve affordability for young first-time homebuyers and renters, sometimes worsening affordability. We present a new nationwide atlas documenting the prevalence of local measures altering property tax burdens. Quasi-experimental evidence from Georgia’s homestead exemption valuation freezes suggests strong capitalization of assessment limits into home values, reinforcing that property tax relief may worsen affordability for first-time buyers.

Date: 2024
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