Implications of U . S . Tax Policy for House Prices , Rents and Homeownership ∗

@inproceedings{Sommer2013ImplicationsOU,
  title={Implications of U . S . Tax Policy for House Prices , Rents and Homeownership ∗},
  author={K Sommer and Paul Sullivan},
  year={2013}
}
This paper studies the impact of the preferential tax treatment of housing, including the mortgage interest deduction, on equilibrium house prices, rents, and homeownership. We build a dynamic model of housing tenure choice that features a realistic progressive tax system in which owner-occupied housing services are tax-exempt, and mortgage interest payments and property taxes are tax deductible. We simulate the effect of various tax reform proposals on the housing market, and find that… CONTINUE READING

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