Do Tax-Deferred Exchanges Impact Purchase Price? Evidence form the Phoenix Apartment Market

Andrew Holmes and Barrett A. Slade

ERES from European Real Estate Society (ERES)

Abstract: Many authors have commented on the compliance risk associated with tax-deferred exchanges. However, no published studies explicitly address whether the risks associated with the exchange process impacts the price at which exchanged assets trade. Using a unique data set that separates buy and sell side transactions for non-direct exchanges, this study examines the price impact of tax-deferred exchanges on apartment transactions in the Phoenix, Arizona market. Consistent with the price pressure hypothesis originally developed by Scholes (1972) and Kraus and Stoll (1972), the data show that exchange participants pay an economically significant premium to acquire replacement assets. A conventional hedonic price index is generated to investigate the rational bounds of the exchange premium. While the impact of an exchange is large, the premium is within the rational bounds.

JEL-codes: R3 (search for similar items in EconPapers)
Date: 2001-06-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://eres.architexturez.net/doc/oai-eres-id-eres2001-180 (text/html)
https://eres.architexturez.net/system/files/pdf/eres2001_180.content.pdf (application/pdf)

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:arz:wpaper:eres2001_180

Access Statistics for this paper

More papers in ERES from European Real Estate Society (ERES) Contact information at EDIRC.
Bibliographic data for series maintained by Architexturez Imprints ().