The paper investigates the effect of the property taxation reform
introduced in Sweden from 2006 to 2008 on the market price of the
affected properties (one-family houses). We make an extensive empirical
analysis of the tax capitalization effect, given that prior research has
detected only partial capitalization and that there has been an
extensive debate regarding the extent to which the tax gets capitalized
into property market prices. In particular, the tax capitalization
effect for single-family house prices was investigated by looking into
various sub-groups of properties and doing extensive statistical
inquiries into the property transaction data. Despite a relatively broad
time period in which the reform took place, a jump in the market values
of the affected properties is detectable in the fourth quarter of 2006.
Our findings emphasise the importance of creating a representative data
sample in analyzing and assessing the outcomes and impacts of policy
interventions such as a taxation reform.