First paper to study the effect of a national property valuation report sample pdf tax cut. Rich administrative register data allow for credible identification of potential capitalization. Contrary to what we would expect, house price responses did not, in general, increase as a consequence of the tax cut.
We find price increases only in the top segment of the market, in which the owners stood to gain very much from the reform. We discuss potential mechanisms such as bounded rationality and supply side explanations. We show that house prices in general did not respond to a substantial cut in the national property tax in Sweden. The estimates are based on rich register data covering more than 100,000 sales over a time period of two and a half years. Because the Swedish property tax is national and thus unrelated to local public goods, our setting is ideal for causal identification of the property tax on house prices.