James R. Follain
NBER Working Papers and Publications
|July 1995||In Search of Empirical Evidence that Links Rent and User Cost|
with Dixie M. Blackley: w5177
Most models of the rental housing market assume a close linkage between the level of residential rents and the after-tax user cost of rental housing capital. However, little empirical evidence exists to establish the strength of this linkage or the speed with which rents adjust to changes in user cost or tax policy. This paper develops and estimates an econometric model of the rental housing market in order to shed light on both of these issues. United States annual data for 1964 through 1993 are used to generate two-stage least squares estimates of a four equation structural model. Although the results are generally consistent with expectations and reveal several interesting relationships among the system variables, the estimates fail to identify a strong relationship between rent and ...
Published: Regional Science and Urban Economics, vol. 26, no. 3-4, pp. 409-431, June 1996
|June 1987||Understanding the Real Estate Provisions of Tax Reform: Motivation and Impact|
with Patric H. Hendershott, David C. Ling: w2289
Capital investment tax provisions have been changed numerous times in the last decade, with depreciation tax lives shortened in 1981 and lengthened ever since and capital gains taxation reduced in 1978 and 1981 and now increased. The first part of this paper analyzes these changes and attributes a large part of them, including the 1986 Tax Act, to changes in inflation: tax depreciation schedules and capital gains taxation that look reasonable when the tax depreciation base is being eroded at ten percent a year and an overwhelming share of capital gains is pure inflation take on a different appearance when inflation is only four percent. The remainder of the paper critiques the typical project model used to compute impacts of tax changes on real estate and report simulation results using a ...
Published: Follain, James R., Patric H. Hendershott and David C. Ling. "Understandingthe Real Estate Provisions of the Tax Act: Their Motivation and impact," National Tax Journal, Sept. 1987 pp. 363-372, Vol 40, No. 3.
|December 1986||Real Estate and the Tax Reform Act of 1986|
with Patric H. Hendershott, David C. Ling: w2098
In contrast to the conventional wisdom, real estate activity in the aggregate is not disfavored by the 1986 Tax Act. Within the broad aggregate, however, widely different impacts are to be expected. Regular rental and commercial activity will be slightly disfavored, while historic and old rehabilitation activity will be greatly disfavored. In contrast, owner- occupied housing, far and away the largest component of real estate, is favored, both directly by an interest rate decline and indirectly owing to the increase in rents. Low-income rental housing may be the most favored of all real estate activities. The rent increase for residential properties will be 10 to 15 percent with our assumption of a percentage point decline in interest rates. For commercial properties, the expected rent inc...
Published: Follain, James R., Patric H. Hendershott and David C. Ling, "Effects on Real Estate," Tax Reform and the U.S. Economy, Pechman (ed.), The Brookings Institution, 1987, pp. 71-94.