Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/80681
Authors: 
Davidoff, Ian
Leigh, Andrew
Year of Publication: 
2013
Series/Report no.: 
IZA Discussion Paper 7463
Abstract: 
Land transfer taxes are a substantial portion of the cost of moving house in many developed countries. Since stamp duties are endogenous with respect to the house price, we create an instrumental variable that is the stamp duty on a property, given that postcode's starting house price and the national house price trend. In a specification with postcode and year fixed effects, this instrument effectively captures policy changes and nonlinearities in the stamp duty schedule. We find that the impact of an increase in the tax rate is to lower house prices, suggesting that the economic incidence of the tax falls on the seller. We also observe impacts of stamp duty on housing turnover. A 10 per cent increase in stamp duty lowers turnover by 3 per cent in the first year, and by 6 per cent if sustained over a 3 year period.
Subjects: 
tax incidence
land sales taxation
residential mobility
JEL: 
H22
H24
H71
R21
R23
R28
Document Type: 
Working Paper

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