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Transaction Taxes, Capital Gains Taxes and House Prices

Nicole Aregger, Martin Brown () and Enzo Rossi ()

No 2013-02, Working Papers from Swiss National Bank

Abstract: Motivated by the search for instruments to contain future housing bubbles, we examine the impact of transaction taxes and capital gains taxes on residential house price growth. We exploit the variation in taxation across Swiss cantons, as well as within-canton changes in taxation over time. We relate these taxes to house price growth observed for 92 regions of the country during the period 1985 - 2009. Our results suggest that higher taxes on capital gains exacerbate house price dynamics while transaction taxes have no impact on house price growth. These findings support the existence of a lock-in effect of capital gains taxes on housing supply. They further suggest that taxes on real estate capital gains and transaction values are not suitable measures to prevent excessive house price growth.

Keywords: House prices; Transaction tax; Capital gains tax; Macroprudential policy (search for similar items in EconPapers)
JEL-codes: E32 H24 R21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac and nep-ure
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
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Persistent link: https://EconPapers.repec.org/RePEc:snb:snbwpa:2013-02

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