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Transaction-tax Evasion in the Housing Market

José García-Montalvo, Amedeo Piolatto and Josep Raya

No 1080, Working Papers from Barcelona Graduate School of Economics

Abstract: We model the behaviour of a buyer trying to evade the real estate transfer tax. We identify over-appraisal as a key, easily-observable element that is inversely related with tax evasion. We conclude that the tax authority could focus auditing efforts on low-appraisal transactions. We include `behavioural' components (shame and stigma) allowing to introduce buyers' (education) and societal (social capital) characteristics that explain individual and idiosyncratic variations. Our empirical analysis confirms the predictions using a unique database, where we directly observe: real payment, value declared to the authority, appraisal, buyers' educational level and local levels of corruption and trust.

Keywords: transfer tax; Tax evasion; second-hand housing market; overappraisal; Loan-To-Value; corruption; social capital; stigma; shame; education (search for similar items in EconPapers)
JEL-codes: G21 H26 R21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-iue, nep-pbe, nep-pub and nep-ure
Date: 2019-03
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