Lack of balance in after-tax returns - lack of tenure neutrality. The Danish case.


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Lack of balance in after-tax returns - lack of tenure neutrality. The Danish case.

Show simple item record Lunde, Jens en_US 2009-02-04T10:26:16Z 2009-02-04T10:26:16Z 2004-08-24T00:00:00Z en_US
dc.description.abstract Abstract. In Denmark, taxation of residential property returns varies considerably with the type of ownership and type of tenure in terms of the way income is calculated, the types of taxes applied and tax rates, which range from 0 % to above 60 %. Together with other housing subsidies this disparity in taxation contributes to the pronounced lack of tenure neutrality in the Danish housing market. The paper illustrates how tax rules alone create distortions and imbalances in the housing and residential property markets and discusses as well the magnitude of the imbalances. The method used is the application of a set of return and user cost equations. The tax aspects of the long-standing rather unequal treatment of private rental dwellings, social rental dwellings, owner-occupied dwellings and private co-operative dwellings, which have drawn decisive tracks in the markets, are discussed. The lowering of the tax rate for the return of institutional pension savings to 15 % which came into effect in 2001 has created a substantial advantage for pension funds compared with private investors with regard to investments in rental residential properties. The owner-occupiers’ user costs and subsidization are shown to depend on their capital structure and to a large extent they depend on whether the owners’ most obvious savings alternatives are either personal investments with heavily taxed returns or institutional pension savings with lightly taxed returns. Also private co-operative associations are tax exempted, and this fact in combination with the prospects of improved legal conditions for raising loans to finance the individual apartments will almost certainly lead to this form of tenure – as "tax free ownership" – capturing part of the market for owner occupation. en_US
dc.format.extent 35 s. en_US
dc.language eng en_US
dc.relation.ispartofseries Working paper;2004-03 en_US
dc.subject.other ejendomsskatter en_US
dc.subject.other danmark en_US
dc.subject.other investering i fast ejendom en_US
dc.subject.other boligøkonomi en_US
dc.subject.other ejendomsret en_US
dc.title Lack of balance in after-tax returns - lack of tenure neutrality. The Danish case. en_US
dc.type wp en_US
dc.accessionstatus modt04aug23 lano en_US
dc.contributor.corporation Copenhagen Business School. CBS en_US
dc.contributor.department Institut for Finansiering en_US
dc.contributor.departmentshort FI en_US
dc.contributor.departmentuk Department of Finance en_US
dc.contributor.departmentukshort DF en_US
dc.idnumber x656445008 en_US København en_US
dc.publisher.year 2004 en_US

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