Transaction-tax evasion in the housing market

Garcia Montalvo, José; Piolatto, Amedeo; Raya, Josep M.

Transaction-tax evasion in the housing market

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Citation

Garcia Montalvo, J, Piolatto, A, Raya, J. Transaction-tax evasion in the housing market. 2019. handle: http://hdl.handle.net/10230/44800

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Abstract

We model the behaviour of a buyer trying to evade the real estate transfer tax. We identify over-appraisal as a key, easily-observable element that is inversely related with tax evasion. We conclude that the tax authority could focus auditing eorts on low-appraisal transactions. We include `behavioural'components (shame and stigma) allowing to introduce buyers'(education) and societal (social capital) characteristics that explain individual and idiosyncratic variations.Our empirical analysis conrms the predictions using a unique database, where we directly observe: real payment, value declared to the authority,appraisal, buyers' educational level and local levels of corruption and trust.