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Housing taxation: a new database for Europe

Salvador Barrios (), Cécile Denis, Viginta Ivaskaite-Tamosiune (), Adriana Reut and Estefania Vazquez Torres ()
Additional contact information
Viginta Ivaskaite-Tamosiune: European Commission - JRC, https://ec.europa.eu/jrc/en
Estefania Vazquez Torres: European Commission - JRC, https://ec.europa.eu/jrc/en

No 2019-08, JRC Working Papers on Taxation & Structural Reforms from Joint Research Centre (Seville site)

Abstract: Tax incentives favouring homeownership are widely used in developed economies. Homeownership is often thought to bring a number of positive contributions, from the promotion of households´ saving to enhanced community engagement. However, housing tax incentives are also considered as a major source of distortions for households´ decisions, especially in absence of taxation of in-kind services related to housing consumption (i.e. imputed rents) and in presence of mortgage interest payment deductibility. These distortions can have wide-ranging consequences for investment, consumption and public finances. Housing tax distortions have rarely been analysed from a cross-country perspective over time, however, not least because of the absence of comparable data and the difficulty to gather detailed information on the specific tax treatment of homeownership. In this paper we aim to fill this gap by providing comparable time series on the main features of housing taxation in European countries. Our database includes information on transfer taxes incurred when buying a house, implicit recurrent property taxes owed by households, capital gain taxes, imputed rent taxation and mortgage interest tax reliefs. The data is provided for the period 1995-2017 by the time of writing this paper and will be updated annually and made available at the following website: https://ec.europa.eu/jrc/en/thematic-research-fiscal-policy/housing-taxation. We use this data to estimate the user cost of owner-occupied housing (UCOH) following the approach proposed by Poterba, (1992) and Poterba and Sinai (2008), which provides a synthetic indicator on the distortions exerted by the tax system on households´ housing investment choices. A number of additional data used to calculate the UCOH indicator, such as maximum loan to value ratio and maximum loan duration, interest rate for long-term government bonds, interest income tax and house price are also provided.

Keywords: Housing taxation; database; user costs of housing; transfer tax; capital gains tax; mortgage interest tax relief; recurrent property tax; imputed rent taxation (search for similar items in EconPapers)
Date: 2019-10
New Economics Papers: this item is included in nep-eur, nep-pbe, nep-pub and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:ipt:taxref:201908

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