Beiträge zur Jahrestagung des Vereins für Socialpolitik 2019: 30 Jahre Mauerfall - Demokratie und Marktwirtschaft - Session: Taxation I No. A18-V1
The tax burden of real estate transactions in Germany increased considerably since the constitutional reform in 2006. We examine the impact of the real estate transfer tax (RETT) on transactions and (net-of-tax) prices of commercial buildings and vacant commercial lots by means of a fixed-effects panel regression. The empirical analysis shows an association of a rise of the RETT by 1% with a decrease of office transactions by up to 0.48% and reduced prices by up to 0.21%. On the market for other commercial properties, transactions and prices decline by 0.17% and 0.19% respectively following a RETT increase. The negative price effects on the commercial real estate market tentatively indicate tax incidence with the seller. In the case of vacant commercial lots, a RETT increase seems to induce an increase of average prices by up to 0.43%, denoting tax incidence with the buyer. We find a negative response to RETT raises of 0.30% for transactions of vacant lots in the data. In addition, we analyze possible neighborhood effects among the states. As for other commercial buildings, an average of a 1% RETT increase in the bordering states of one state is associated with a decrease in the corresponding transactions by 0.46% and a price increase by 0.46%, whereas the prices for vacant commercial lots rise by 0.84%. Hence, the border effect seems to surpass the direct price effect and suggests spatial structural changes in the investment behavior.
commercial real estate market panel regression real estate transfer tax share deal