If a tax on real estate results in a decrease in the supply of housing, the tax will be:

Question

Quizplus · Accepted Answer

A tax on real estate that decreases the supply of housing will be only partially capitalized. This means that the tax will be reflected in the market prices to some extent, affecting both property owners and renters, but not fully absorbed by either. The tax burden is shared between landlords (through potentially lower property values or returns) and renters (through potentially higher rents), rather than being fully borne by one side or completely passed through to property prices.

If a Tax on Real Estate Results in a Decrease