Abstract

http://ssrn.com/abstract=2002865
 


 



Mortgage Interest Deductions and Homeownership: An International Survey


Steven C. Bourassa


Florida Atlantic University

Donald R. Haurin


Ohio State University (OSU) - Department of Economics

Patric H. Hendershott


University of Aberdeen - Aberdeen Business School

Martin Hoesli


University of Geneva - Graduate School of Business (HEC-Geneva); University of Aberdeen - Business School; Swiss Finance Institute

March 13, 2013

Swiss Finance Institute Research Paper No. 12-06

Abstract:     
The aim of this paper is to review the international evidence on the impacts of mortgage interest deductions on homeownership rates. The probability of becoming a homeowner is a function of the relative cost of owning and renting, borrowing constraints, permanent household income, and a set of taste variables. The relative cost of owning and renting is in part a function of house prices and the annual user cost of owner-occupied housing. Tax policies affect the user cost of owner-occupied housing and, in turn, the probability of becoming a homeowner. They also affect the price of housing due to capitalization effects. We draw on a number of empirical studies that have been conducted for several countries in North America, Europe, Australasia, and Asia. The empirical evidence suggests that, contrary to popular wisdom, the MID generally does not increase the ownership rate. This result is likely due to the fact that the MID is capitalized into house prices, especially where housing supply is inelastic.

Number of Pages in PDF File: 38

Keywords: homeownership, tax policy, house prices

JEL Classification: R21, R31, G21, H2

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Date posted: February 12, 2012 ; Last revised: September 3, 2013

Suggested Citation

Bourassa, Steven C. and Haurin, Donald R. and Hendershott, Patric H. and Hoesli, Martin, Mortgage Interest Deductions and Homeownership: An International Survey (March 13, 2013). Swiss Finance Institute Research Paper No. 12-06. Available at SSRN: http://ssrn.com/abstract=2002865 or http://dx.doi.org/10.2139/ssrn.2002865

Contact Information

Steven C. Bourassa (Contact Author)
Florida Atlantic University ( email )
777 Glades Road
Boca Raton, FL 33431
United States
5028077642 (Phone)
Donald R. Haurin
Ohio State University (OSU) - Department of Economics ( email )
154 N. Oval Mall
1010G Derby Hall
Columbus, OH 43210-1172
United States
614-292-0482 (Phone)
614-292-9530 (Fax)
Patric H. Hendershott
University of Aberdeen - Aberdeen Business School ( email )
Dunbar Street
Aberdeen AB24 3QY, Scotland
United Kingdom
Martin Edward Ralph Hoesli
University of Geneva - Graduate School of Business (HEC-Geneva) ( email )
40 Boulevard du Pont d'Arve
Geneva 4, 1211
Switzerland
+41 22 379 8122 (Phone)
+41 22 379 8104 (Fax)
University of Aberdeen - Business School ( email )
Edward Wright Building
Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom
+41 22 379 8122 (Phone)
+41 22 379 8104 (Fax)
Swiss Finance Institute ( email )
c/o University of Geneve
40, Bd du Pont-d'Arve
1211 Geneva, CH-6900
Switzerland

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