The German Real Estate Transfer Tax: Evidence for Single-Family Home Transactions

This paper uses recent data for single-family home purchases to study the effects of the German real estate transfer tax. We aim to separate the tax’s short-term anticipatory effects from its long-term effects on real estate transactions. The data indicate that an increase in the transfer tax is negatively correlated with the number of transactions that take place in the market for single-family homes. We estimate that a one percentage point higher transfer tax produces enormous anticipation effects and yields approximately 6% fewer transactions over the long run.