Tax-driven Bunching of Housing Market Transactions: The case of Hong Kong

Charles Leung, Tommy Tin Cheuk Leung and Kwok Ping Tsang

MPRA Paper from University Library of Munich, Germany

Abstract: We study the implications of property market transaction tax. As property buyers are obligated to pay a transaction tax (“stamp duty”, or SD) where the rate increases with the value of the transaction, there are incentives to trade at or just below the cutoff points of the tax schedule. Thus, both “bunching in transactions” and “underpricing” should be observed near those cutoffs. Furthermore, the bunching points should change with the tax schedule. We confirm these conjectures with a rich dataset from the Hong Kong housing market and provide a measure of the tax avoidance.

Keywords: bunching; change in nonlinear tax schedule; housing market; tax avoidance and tax evasion; underpricing (search for similar items in EconPapers)
JEL-codes: H20 H26 R21 (search for similar items in EconPapers)
Date: 2014-02
New Economics Papers: this item is included in nep-pub and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Tax-driven Bunching of Housing Market Transactions: The Case of Hong Kong (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:53729

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