Property Taxes Discourage Density

Local property taxes are often levied disproportionately on multifamily developers, resulting in higher taxes for apartment-dwellers, says Stephen Smith.

1 minute read

November 30, 2010, 1:00 PM PST

By Tim Halbur


Smith looks at a 2006 paper published in the journal Housing Policy Debate:

The study finds that for the nation as a whole, multifamily rental housing bears an effective tax rate (tax divided by property value) that is at least 18 percent higher than the rate on single-family owner-occupied housing. This gap appears to have arisen during the 1990s. The level of taxation and the apartment/house differential vary considerably by location. Much-but not all-of the differential is associated with the fact that apartments have a lower average property value per unit than houses. The residential property tax, as implemented, promotes low-density development, disproportionately burdens lower-value properties, and may impose higher taxes on apartment residents than on homeowners with identical incomes.

Thanks to Stephen Smith

Tuesday, November 30, 2010 in Market Urbanism

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