Do Transfer Tax Cuts Create Homeowners?

Löffler, Max () and Jonas Wogh ()
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Löffler, Max: Maastricht University
Jonas Wogh: Tilburg University and Leeds School of Business, University of Colorado at Boulder

No 19071, IZA Discussion Papers from IZA Network @ LISER

Abstract: We study whether financial assistance to prospective homebuyers succeeds in promoting homeownership by analyzing a prominent real-estate transfer tax exemption for young homebuyers in the Netherlands. The reform offers quasi-experimental variation across time, buyers, and units, which we exploit using granular administrative data and various complementary reduced-form approaches. The two-percentage-point transfer tax cut substantially raised transactions among the young, but we can rule out even modest medium-run increases in homeownership. Instead, we document large timing and bunching responses. Prices of qualifying units increased by between 1.2% and 1.8%, suggesting that the tax cut mostly benefitted sellers. Welfare simulations reveal that, while the tax cut reduced transfer tax distortions and increased overall economic surplus, gains accrued primarily to upper-middle-income households.

Keywords: housing markets; homeownership; transfer taxes; welfare (search for similar items in EconPapers)
JEL-codes: H22 H31 R21 R28 (search for similar items in EconPapers)
Date: 2026-11
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