Template-Type: ReDIF-Paper 1.0

Author-Name: Stefanie Braun 
Author-X-Name-First: Stefanie
Author-X-Name-Last: Braun 

Title: Effects of Preferential Tax Treatment on German Homeownership
	
Abstract: The paper analyzes the effects of mortgage interest deductibility and untaxed imputed rental income on the German homeownership. I use a general equilibrium life-cycle framework, where a minimum down-payment constraint on purchases of housing capital is the critical element of the model framework. I find that both tax policies would increase Germany's low homeownership rate. However, these tax policies would entail substantial welfare losses for individuals of all income quintiles in the long run. Finally, wealth eects are relatively small and the welfare analysis shows that individuals would prefer to live in an economy without preferential tax treatment of
housing.

Length: 35 pages
Creation-Date:  2021-06
File-URL: http://www.bgpe.de/texte/DP/209_Braun.pdf
File-Format: Application/pdf
File-Function: First version, 2021
Number: 209
Classification-JEL: E62; H3
Keywords: German homeownership rate; Housing taxation; Imputed rents; Mortgage
deductibility; Capital accumulation
Handle: RePEc:bav:wpaper:209_Braun