Working Paper: NBER ID: w1352
Authors: Patric H. Hendershott; David C. Ling
Abstract: The Economic Recovery Tax Act of 1981 significantly reduced the taxation of income-producing properties by accelerating tax depreciation on both new and, especially, existing properties. A partial reversal of the 1981 legislation appears likely. To provide some insight into the possible effects of a decrease in tax depreciation of income-producing properties, two potential tax changes are analyzed: an increase from 15 to 20 years in the tax service lives of both new and existing properties and an increase for existing properties only. Both residential and commercial/industrial properties are considered.
Keywords: Tax Law; Depreciable Real Estate; Property Values; Economic Recovery Tax Act
JEL Codes: H25; R31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Changes in tax depreciation (H25) | Property values (R33) |
| Changes in tax depreciation (H25) | Real rents (R31) |
| Increasing tax service life from 15 to 20 years (H29) | Property values (R33) |
| Increasing tax service life from 15 to 20 years (H29) | Real rents (R31) |
| Tax law changes (K34) | Property values (R33) |
| Tax law changes (K34) | Real rents (R31) |