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Tax Rates and Implicit Rates of Return on Owner-Occupied Single-Family Housing

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Abstract

Private sector investors, as well as public sector policy analysts and consumers, need accurate historical estimates of returns for single-family houses. In addition, researchers need such data to understand capital flows and supply/demand relationships among asset classes. Unfortunately, such estimates have not been available on a comprehensive basis. Each previous study used only a very few samples. This study alleviates these problems by providing returns for single years, and possible holding period, levered (most realistic) and unlevered examples, from appreciation and cash flow separately. It then adjusts each of these for six different tax brackets (0%, 10%, 20%, 30%, 40% and 50%). This should help focus the debate on the "effect of inflation on the demand for housing." The comprehensive rate-of-return information provided here is compared to returns for other assets to determine relative attractiveness. The results obtained indicate generally lower rates of return on owner-occupied, single-family housing than previous studies and a priori expectations.

Suggested Citation

  • James R. Webb & Jack H. Rubens, 1987. "Tax Rates and Implicit Rates of Return on Owner-Occupied Single-Family Housing," Journal of Real Estate Research, American Real Estate Society, vol. 2(2), pages 11-28.
    • Handle: RePEc:jre:issued:v:2:n:2:1987:p:11-28
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    References listed on IDEAS

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    1. William W. Alberts & Halbert S. Kerr, 1981. "The Rate of Return from Investing in Single-Family Housing," Land Economics, University of Wisconsin Press, vol. 57(2), pages 230-242.
    2. Mike Miles & Tom McCue, 1984. "Commercial Real Estate Returns," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 12(3), pages 355-377, September.
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    Cited by:

    1. Waggle, Doug & Johnson, Don T., 2009. "Homeownership and mixed-asset portfolio allocations," The Quarterly Review of Economics and Finance, Elsevier, vol. 49(2), pages 484-500, May.
    2. Norman G. Miller & Michael A. Sklarz, 1989. "A Comment on "Tax Rates and Implicit Rates of Return on Owner-Occupied Single-Family Housing"," Journal of Real Estate Research, American Real Estate Society, vol. 4(1), pages 81-85.
    3. James R. Webb & Jack H. Rubens, 1989. ""Tax Rates and Implicit Rates of Return on Owner-Occupied Single-Family Housing:" A Reply," Journal of Real Estate Research, American Real Estate Society, vol. 4(1), pages 85-86.
    4. Arkadiusz Górski & Kamila Urbańska & Agnieszka Parkitna, 2020. "Identification of risks of investments into residential premises for rent in Poland," WORking papers in Management Science (WORMS) WORMS/20/15, Department of Operations Research and Business Intelligence, Wroclaw University of Science and Technology.
    5. Arkadiusz Górski & Agnieszka Parkitna & Kamila Urbańska, 2021. "Identification of risks of investments into residential premises for rent in Poland," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 31(4), pages 53-68.

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    More about this item

    JEL classification:

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

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