Real Estate Papers
Document Type
Journal Article
Date of this Version
2012
Publication Source
Journal of Economic Geography
Volume
12
Issue
2
Start Page
327
Last Page
354
DOI
10.1093/jeg/lbr007
Abstract
Taxes levied on the sale or purchase of real estate are pervasive but little studied. By exploiting a natural experiment arising from Toronto's imposition of a Land Transfer Tax (LTT) in early 2008, we estimate the impact of real estate transfer taxes on the market for single family homes. Our data show that Toronto's 1.1% tax caused a 15% decline in the number of sales and a decline in housing prices about equal to the tax. Relative to an equivalent property tax, the associated welfare loss is substantial, about $1 for every $8 in tax revenue. The magnitude of this welfare loss is comparable to those associated with better known interventions in the housing market. Unlike many possible tax reforms, eliminating existing LTTs in favour of revenue equivalent property taxes appears straightforward.
Copyright/Permission Statement
This is a pre-copyedited, author-produced PDF of an article accepted for publication in Journal of Economic Geography following peer review. The version of record is available online at: http://joeg.oxfordjournals.org/content/12/2/327.full#cited-by
Keywords
land transfer tax, property tax, land regulation
Recommended Citation
Dachis, B., Duranton, G., & Turner, M. A. (2012). The Effects of Land Transfer Taxes on Real Estate Markets: Evidence From a Natural Experiment in Toronto. Journal of Economic Geography, 12 (2), 327-354. http://dx.doi.org/10.1093/jeg/lbr007
Date Posted: 27 November 2017
This document has been peer reviewed.
Comments
At the time of publication, Gilles Duranton was affiliated with the University of Toronto. Currently, he is a faculty member at the Real Estate Department at the University of Pennsylvania.