Tax Subsidies and Housing Affordability

30 Pages Posted: 28 Feb 2021 Last revised: 12 Aug 2022

See all articles by Anastasia Girshina

Anastasia Girshina

Swedish House of Finance

Francois Koulischer

University of Luxembourg

Ulf von Lilienfeld‐Toal

Universite du Luxembourg

Date Written: August 10, 2022


We argue that the effectiveness of tax subsidies to make housing affordable depends on four parameters: the elasticity of supply and demand, and the distribution of housing ownership and consumption. We estimate these parameters with administrative data on real estate transactions and survey data on household balance sheets in Luxembourg. Using kinks in the taxes on transactions and on new constructions, we find that the `leakage' of housing tax subsidies to the wealthier households is substantial. The top 10% of households by real estate wealth capture between 17% and 22% of the surplus from housing tax subsidies.

Keywords: Real Estate, Taxes, Housing Subsidies, Housing Affordability

JEL Classification: G51, H71, R21, R31

Suggested Citation

Girshina, Anastasia and Koulischer, Francois and von Lilienfeld‐Toal, Ulf, Tax Subsidies and Housing Affordability (August 10, 2022). Swedish House of Finance Research Paper No. 21-08, Available at SSRN: or

Anastasia Girshina

Swedish House of Finance ( email )

Drottninggatan 98
111 60 Stockholm

Francois Koulischer (Contact Author)

University of Luxembourg ( email )

Kirchberg, 6, rue Richard Coudenhove-Kalergi

Ulf Von Lilienfeld‐Toal

Universite du Luxembourg

L-1511 Luxembourg

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