Kiesewetter, Dirk Bensemann, Tina Schönemann, Kristin
[Journal:] BuR - Business Research [ISSN:] 1866-8658 [Volume:] 2 [Year:] 2009 [Issue:] 1 [Pages:] 11-37
We evaluate the profitability of investments in residential property in Germany after unification with a focus on the comparison of East and West Germany. Calculations are carried out for (1) the after-tax return an investor might have expected at the beginning of the 1990s, and (2) the after-tax return that has been realized ten years after. We compare a set of statistical data for investments in fifty major cities by using complete financial budgeting. The results show that tax subsidies could not always protect investors from losing money, but they have boosted realized returns after tax considerably. Therefore, it was indeed the taxpayers, not the investors, who have borne the cost of reconstructing East Germany.
after-tax return on investment assisted area law empirical study income tax reduction loss offset property prices real-estate investment return on equity capital roe special depreciation tax subsidies