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Property Tax and Tenure Choice: Implications for China

Author

Listed:
  • Jian Chen

    (IFE Group, 51 Monroe Street, Rockville, MD 20850, USA, and Johns Hopkins University)

  • David H. Downs

    (The Kornblau Institute, Virginia Commonwealth University)

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 logistic regression on 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 by 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 that 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 the best of 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 property tax policy in China.

Suggested Citation

  • Jian Chen & David H. Downs, 2013. "Property Tax and Tenure Choice: Implications for China," International Real Estate Review, Global Social Science Institute, vol. 16(3), pages 323-343.
    • Handle: RePEc:ire:issued:v:16:n:03:2013:p:323-343
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    References listed on IDEAS

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    More about this item

    Keywords

    Real Property Tax; Tenure Choice; China;
    All these keywords.

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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