How taxation varies across the world between owner-occupation, private renting and other housing tenures - An overview

Dr Padraic Kenna of the Centre for Housing Law, Rights and Policy
Apr 13 2021 Posted: 10:35 IST

The taxation of housing in Ireland generates strong reactions. Powerful expectations persist of major State support for the property ownership, firstly involving major State subsidies for land ownership, and later until the 1990s, major State support for owner-occupied housing.

The current local property tax (which is only levied on housing and not land) has proven quite divisive, and it is timely to review how housing is taxed in other countries. Professor Padraic Kenna of the Centre for Housing Law, Rights and Policy at NUI Galway has been cooperating in an international study led by the London School of Economics and Copenhagen Business School, examining the taxation of all types of housing across European and other countries.

Housing taxation takes many forms, but only in the Netherlands is there an imputed rent taxation system for owner-occupiers – and even there it does not reflect market values. Local property taxes (not based on imputed rent) for owner-occupied housing are in use everywhere, and valuations are also mostly well below market values. Capital gains tax on primary residences is only paid in Portugal, Spain, Sweden and the USA, although in all countries, landlords pay a capital gains tax on rented property. Owner-occupied housing is also treated differently to other assets included rented housing, in relation to inheritance taxes.

While the price of housing and land has been rising rapidly in many countries and wealth is more concentrated than income, increasing land and property taxes can be seen to be both more equitable, particularly as a tax on unearned income, taking pressure off income taxation. However, in all countries, taxes on real property, including housing, and other types of wealth only account for a relatively small part of tax revenues. Taxes on property in Ireland at 5.6% of total taxes and duties (2019) were the same as the OECD average, but significantly lower than Australia, the UK and USA.

This new research published by London School of Economics/ Copenhagen Business School examines taxation of housing addresses housing specific issues: how owner-occupation compares with renting, particularly private renting, and what impact taxation, subsidies and other factors have on tenure choice within each country and the how the systems vary across countries. The analysis takes into account a wide range of taxes, such as property, transactions, stamp duties, wealth and inheritance, where there may be tenure differences.

In most countries, owner-occupied housing is treated as a consumption good, with no mortgage interest relief or capital gains tax. Private renting on the other hand – with some exceptions, notably the UK - is generally treated, as an investment good, with taxes on net income and capital gains. But even that is changing – in seven countries, four from Eastern Europe, mortgage tax relief for landlords is not available, and in the UK for instance, tax reliefs are now being heavily restricted.

Overall, it is clear that housing taxation remains a highly complex area, where many if not most decisions are made for purposes unrelated to neutrality between tenures, and often for highly political reasons. Equally, there are immense differences between countries in terms of the mix of tenure-specific and other housing and land-based taxes.

How taxation varies between owner-occupation, private renting and other housing
tenures in European countries - An overview. Jens Lunde (Copenhagen Business School) and Christine Whitehead (London School of Economics). February 2021. UK Collaborative Centre for Housing Evidence.

The full report is available here:

The Centre for Housing Law, Rights and Policy (CHLRP) at NUI Galway endeavours to create a space for a free and open discussion, combining research, resources, advocacy and publications on housing law, rights and policy in Ireland and internationally.