Property taxes and rental housing: Evidence from China

Chengrui Xiao and Bo Zhou

Real Estate Economics, 2023, vol. 51, issue 4, 931-958

Abstract: We investigate the effect of property taxes on households’ rental income by exploiting regional variations in the introduction of property taxes in China in 2011. Using the propensity score matching combined with a difference‐in‐differences approach, we find that the rental income of households in pilot areas significantly increased after 2011. Hence, homeowners tend to shift the potential property tax burden to tenants. Additionally, this positive effect is driven by the extensive margin, rather than the intensive margin. Our finding is robust to various alternative specifications and subsample analysis. We then adopt a triple‐difference model to show that the effect varies considerably across households that own residential premises in different regions and with different property characteristics.

Date: 2023
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https://doi.org/10.1111/1540-6229.12420

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