A Bad Bunch: Asset Value Under-Reporting in the Mumbai Real Estate Market

76 Pages Posted: 4 Apr 2022 Last revised: 18 May 2022

See all articles by Santosh Anagol

Santosh Anagol

University of Pennsylvania - Wharton School of Business - Business Economics and Public Policy Department

Vimal Balasubramaniam

Queen Mary University of London; Centre for Economic Policy Research (CEPR)

Tarun Ramadorai

Imperial College London; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Antoine Uettwiller

Imperial College Business School

Date Written: May 17, 2022

Abstract

Real estate values are often under-reported to avoid transaction and property taxes, and to hide wealth built from tax-evaded income. We develop a new method to extract estimates of under-reporting, and employ this measure in the Mumbai real estate market. This approach compares the bunching of reported property values around government-assessed guidance values with a third-party measure of true underlying transactions prices. We estimate that 13 percent of value in Mumbai real estate is under-reported between 2013 and 2018. Measured under-reporting spikes immediately before increases to government-assessed values, and properties with mortgages from public-sector banks and banks with high non-performing assets exhibit more visible evidence of under-reporting.

Keywords: real estate, under-reporting, tax evasion, mortgages, bunching

JEL Classification: G21, G50, H26, H71, R30, R38,

Suggested Citation

Anagol, Santosh and Balasubramaniam, Vimal and Ramadorai, Tarun and Uettwiller, Antoine, A Bad Bunch: Asset Value Under-Reporting in the Mumbai Real Estate Market (May 17, 2022). Available at SSRN: https://ssrn.com/abstract=4055401 or http://dx.doi.org/10.2139/ssrn.4055401

Santosh Anagol

University of Pennsylvania - Wharton School of Business - Business Economics and Public Policy Department ( email )

3641 Locust Walk
Philadelphia, PA 19104-6372
United States

Vimal Balasubramaniam

Queen Mary University of London ( email )

Mile End Road
London, London E1 4NS
United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Tarun Ramadorai (Contact Author)

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

HOME PAGE: http://www.tarunramadorai.com

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Antoine Uettwiller

Imperial College Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom

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