Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/232436 
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 8839
Publisher: 
Center for Economic Studies and Ifo Institute (CESifo), Munich
Abstract: 
This paper examines the effects of real estate transfer taxes (RETT) on property prices using a rich micro dataset of roughly 17 million German properties for the period from 2005 to 2019. We exploit a 2006 constitutional reform that allows states to set their own RETT rates, leading to frequent increases in states’ tax rates in the subsequent years. Our monthly event study estimates indicate a price response that strongly exceeds the change in the tax burden for single transactions. Twelve months after a reform, a one percentage point increase in the tax rate reduces property prices by on average 3%. Effects are stronger for apartments and apartment buildings than for single-family houses. Moreover, negative price effects are predominantly found in growing housing market regions. Our results can be rationalized by a theoretical model that predicts larger price responses in sellers’ markets and for properties with a high transaction frequency.
Subjects: 
real estate transfer taxes
property taxes
housing market
JEL: 
H22
H71
R32
R38
Document Type: 
Working Paper
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