Journal Article

Taxes, homeownership, and the allocation of residential real estate risks

Abstract: Home equity is the predominant form of savings for most Americans because it helps them save on taxes. However, homeownership also determines how the risks of fluctuations in the value of residential real estate are borne. In this article, Satyajit Chatterjee looks at how the tax benefit of homeownership has moved households toward undiversified investments in risky residential real estate by making it costly for them to rent their homes. He also points out the often overlooked risk-allocation consequences of proposed changes in the U.S. tax code.

Keywords: Real property; Taxation; Housing;

Bibliographic Information

Provider: Federal Reserve Bank of Philadelphia

Part of Series: Business Review

Publication Date: 1996

Issue: Sep

Pages: 3-10