Working Paper Series, Department of Economics, Copenhagen Business School
Clemens Fuest, Bernd Huber and Søren Bo Nielsen
Capital gains taxation and house price fluctuations
Abstract: Recent years have seen large swings in house prices in
many countries. Motivated by housing price variations, proposals for taxing
capital gains on housing have repeatedly been put forth. The idea seems to
be that such taxes would curb the redistribution occurring between those
owning houses and those trying to get into the market for owner-occupied
housing. Our paper shows that at least in simple settings, a tax on real
capital gains on housing will only lead to even bigger price swings and
will not be able to redistribute between people appearing on either side of
the housing market.
Keywords: capital gains tax; housing market; price fluctuations; (follow links to similar papers)
JEL-Codes: H23; H24; R31; (follow links to similar papers)
29 pages, September 12, 2006
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