Mansion Tax: The Effect of Transfer Taxes on the Residential Real Estate Market

Wojciech Kopczuk and David Munroe

American Economic Journal: Economic Policy, 2015, vol. 7, issue 2, 214-57

Abstract: Using discontinuities in housing transaction taxes in New York and New Jersey we find robust price bunching. Incidence for transactions local to the notch falls on sellers, with no evidence of evasion. The volume of missing transactions above the notch exceeds those bunching (beyond the usual extensive-margin response), indicating incentives for buyers and sellers not to transact (market unravels). The possibility of unraveling affects interpretation and estimation of bunching. Away from the threshold, we find increased discounts and weaker relationship between listing and sale prices. Equilibrium bargaining framework highlights that taxation affects the ultimate allocation in this search market. (JEL H71, R21, R31)

JEL-codes: H71 R21 R31 (search for similar items in EconPapers)
Date: 2015
Note: DOI: 10.1257/pol.20130361
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Citations: View citations in EconPapers (92)

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Working Paper: Mansion tax: The Effect of Transfer Taxes on the Residential Real Estate Market (2015)
Working Paper: Mansion Tax: The Effect of Transfer Taxes on the Residential Real Estate Market (2014)
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