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Transaction-tax evasion in the housing market

José G. Montalvo (), Amedeo Piolatto () and Josep Raya ()
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José G. Montalvo: Universitat Pompeu Fabra-ICREA, BGSE
Josep Raya: Universitat Pompeu Fabra, ESCSE (Tecnocampus)

No 2019/03, Working Papers from Institut d'Economia de Barcelona (IEB)

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-acc, nep-eur, nep-iue, nep-pbe and nep-ure
Date: 2019
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