Kalenderdetails

Vortragende Person/Vortragende Personen:
Maurice Hofmann (Deutsche Bundesbank)

Homeownership and Taxation - A Policy Comparison between Germany and the Netherlands

Abstract: This paper exploits differential tax-treatment of a household’s main residence as a source of the gap in homeownership-rates between Germany and the Netherlands. Germany and the Netherlands share the common history of a generous social security system that provides extensive health care, long-term care and a high-quality social-housing sector. Nevertheless, homeownership-rates in both countries are almost 15 percentage points apart. The following simulation model allows to close this gap by more than two-thirds after introducing Dutch policies that apply to housing into the model. These policies include (I) reduced transaction costs, (II) mortgage interest deductibility, (III) Dutch labour and capital income tax-rates as well as (IV) lower down-payment requirements. I compare the tax-treatment of real-estate in both countries from a distributional and efficiency point of view. Efficiency along the transition path is computed by including a lump-sum redistribution authority (LSRA) into the model. On aggregate, the transition towards the Dutch policy set is found to be efficiency-decreasing.