If a real estate tax causes rents to rise, it cannot be fully capitalized.

Question

Quizplus · Accepted Answer

If a real estate tax causes rents to rise, it means that the burden of the tax is shared by both the landlord and the tenant. The landlord may pass on some of the tax to the tenant in the form of higher rent, but the tenant may also choose to move to a different property with lower rent. Therefore, the tax cannot be fully capitalized by the landlord.

If a Real Estate Tax Causes Rents to Rise, It