Giving Households Credit: How Changes in the Tax Code Could Promote Homeownership

Posted: 20 Sep 1996

See all articles by Richard K. Green

Richard K. Green

University of Southern California - Lusk Center for Real Estate

Kerry D. Vandell

University of California, Irvine - Paul Merage School of Business; University of California, Irvine School of Law

Date Written: Undated

Abstract

Recent Administration proposals intend to increase the homeownership rate by roughly 2.5 percent to 67.5 percent by the year 2000. The possible use of the federal tax code is virtually ignored in these proposals. Using a user cost framework incorporated into a tenure choice equation and both macro- and micro-level analyses, we demonstrate that the revenue-neutral replacement of the current deductibility of home mortgage interest and property taxes with a tax credit of the appropriate level alone can increase aggregate homeownership rates by approximately 3 percent. Moreover, these increases (and accompanying increases in home values) are even higher in lower-income neighborhoods, suggesting that such a policy could address the supplementary community development purpose of neighborhood stabilization.

JEL Classification: R21, R38, H23

Suggested Citation

Green, Richard K. and Vandell, Kerry D., Giving Households Credit: How Changes in the Tax Code Could Promote Homeownership (Undated). Available at SSRN: https://ssrn.com/abstract=9150

Richard K. Green (Contact Author)

University of Southern California - Lusk Center for Real Estate ( email )

2250 Alcazar Street
Los Angeles, CA 90089
United States

Kerry D. Vandell

University of California, Irvine - Paul Merage School of Business ( email )

Paul Merage School of Business
Irvine, CA California 92697-3125
United States

University of California, Irvine School of Law ( email )

401 E. Peltason Dr.
Ste. 1000
Irvine, CA 92697-1000
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
965
PlumX Metrics