Property Tax and Tenure Choice: Implications for China

International Real Estate Review, Volume 16, Number 3, Winter 2013

21 Pages Posted: 18 Mar 2014

See all articles by Jian Chen

Jian Chen

IFE Group; CreditWise Technology Company Limited; Caixin Insight Group; MSCI Inc.

David H. Downs

Virginia Commonwealth University (VCU) - Department of Finance, Insurance & Real Estate; The Kornblau Institute

Date Written: September 2, 2012

Abstract

This paper examines real property tax as a determinant of tenure choice. The analysis is conducted in two stages. First, parameter estimates for a reduced-form homeownership model are obtained through multivariate analysis of data drawn from the U.S. Survey of Income and Program Participation (SIPP). Second, data from the Chinese Household Income Project (CHIP) is used to obtain predicted homeownership for China using the SIPP-based model. Actual and predicted values of homeownership in China are presented, and the marginal effect of property tax is computed. Overall, we find tenure choice is significantly influenced by property tax, even after controlling for a wide range of supply and demand considerations. Furthermore, and in the case of China, we show that the negative impact of property tax on homeownership may be mitigated by corresponding ownership incentives (e.g., tax policy). To our knowledge, this is the first paper to explicitly analyze property tax in this regard. Implications based on the empirical analysis are applicable to the evolution of China’s property tax policy.

Keywords: Real Property Tax, Tenure Choice, China

JEL Classification: G28, H20, Q15, R38

Suggested Citation

Chen, Jian and Downs, David H., Property Tax and Tenure Choice: Implications for China (September 2, 2012). International Real Estate Review, Volume 16, Number 3, Winter 2013. Available at SSRN: https://ssrn.com/abstract=2410336

Jian Chen

IFE Group ( email )

51 Monroe St., Suite 1100
Rockville, MD Maryland 20850
United States
3013096560 (Phone)
3013096562 (Fax)

CreditWise Technology Company Limited

Chengdu
China

Caixin Insight Group

Beijing
China

MSCI Inc.

Shanghai
China

David H. Downs (Contact Author)

Virginia Commonwealth University (VCU) - Department of Finance, Insurance & Real Estate ( email )

Richmond, VA 23284-4000
United States

The Kornblau Institute ( email )

Richmond, VA 23284-4000
United States

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