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| Author: | Hoyt, W. H. Rosenthal, S. S. |
| Title: | Capital gains taxation and the demand for owner-occupied housing |
| Journal: | Review of Economics and Statistics
1990 : FEB, VOL. 72:1, p. 45-54 |
| Index terms: | CAPITAL GAINS TAX TAXATION STATISTICAL METHODS HOUSING FINANCE |
| Language: | eng |
| Abstract: | Analyzes of owner-occupied housing (H) ignore the taxation of capital gains because homeowners do not pay a capital gains tax if they buy up when they move. However, the capital gains tax code introduces a kink into the budget constraint of most previous homeowners, causing previous owners to face a different price of H depending on whether they buy up or down. There is a control for the kinked budget constraint within a maximum likelihood model of owner-occupied H demand. Results indicate that failure to model the capital gains tax provisions leads to inefficient estimates of the elasticities of demand. |
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