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Rental Housing and the Economic Recovery Tax Act of 1981

Author

Listed:
  • William B. Brueggeman

    (Southern Methodist University)

  • Jeffrey D. Fisher

    (Indiana University)

  • Jerrold J. Stern

    (Indiana University)

Abstract

This article presents a study of the impact of ERTA on the market for rental housing. Major changes in capital recovery periods and in the methods of depreciation available to investors in rental housing have been brought about because of ERTA. The effects of these changes are modeled, and short-run changes in demand price and rents are simulated with a baseline case deemed typical of a rental housing development. Results indicate that depending on inflation, declines in rent-to-value ratios ranging from 20% to 33% and 24% to 48% for conventional and low-income housing, respectively, may be expected. This implies some substitution of low-income rental housing, for otherwise, identical housing may occur and, because of new capital recovery provisions, properties will be bought and sold more frequently than previously.

Suggested Citation

  • William B. Brueggeman & Jeffrey D. Fisher & Jerrold J. Stern, 1982. "Rental Housing and the Economic Recovery Tax Act of 1981," Public Finance Review, , vol. 10(2), pages 222-241, April.
    • Handle: RePEc:sae:pubfin:v:10:y:1982:i:2:p:222-241
    DOI: 10.1177/109114218201000207
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    References listed on IDEAS

    as
    1. Miller, Merton H, 1977. "Debt and Taxes," Journal of Finance, American Finance Association, vol. 32(2), pages 261-275, May.
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    Cited by:

    1. Wood, Gavin A., 2001. "Are There Tax Arbitrage Opportunities in Private Rental Housing Markets?," Journal of Housing Economics, Elsevier, vol. 10(1), pages 1-20, March.
    2. Patric H. Hendershott & David C. Ling, 1984. "Prospective Changes in Tax Law and the Value of Depreciable Real Estate," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 12(3), pages 297-317, September.
    3. D'Ann M. Petersen & Keith R. Phillips & Mine K. Yücel, 1994. "The role of tax policy in the boom/bust cycle of the Texas construction sector," Working Papers 9413, Federal Reserve Bank of Dallas.

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