The housing market is competitive in the big cities.

In Berlin there was even a majority in a referendum for the expropriation of large housing companies.

Three professors are now opposing this idea together: Clemens Fuest from Munich, Johanna Hey from Cologne and Christoph Spengel from Mannheim would rather tax leased real estate rather than expropriating it.

Jan Hauser

Editor in business.

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"Instead of expropriating real estate, the legislature could think of providing for a capital gain taxation for income tax, abolishing the trade tax exemption for real estate companies and reforming the real estate transfer tax," they write in an article for the Ifo Schnelldienst, which they published on Wednesday to have.

"The legislature could think of taxing capital gains outside the current 10-year period, abolishing the trade tax exemption for real estate companies and reforming the real estate transfer tax," says lawyer Hey, who heads the Institute for Tax Law at Cologne University directs.

Economist Fuest is President of the Munich Ifo Institute, and Spengel is engaged in business taxation at his chair in Mannheim: "In the case of rented properties, the double benefit of unlimited income tax deduction and tax exemption of capital gains is one of the last remaining major tax breaks under income tax law," he said.

"Capital gains would have to be taxed in full." This is also an unequal treatment to share investments.

Increase government revenue

The authors link the urban housing shortage with the burden on state finances since the beginning of the corona pandemic.

With a stronger taxation of real estate, they see the possibility of increasing government revenues.

The tax rules would encourage the accumulation of real estate in the hands of a few people and businesses.

The scientists call the tax privileges they have given to real estate a serious deviation from the principle that income is taxed equally.

“It is therefore advisable to dismantle the existing, extensive tax privileges for property ownership, which primarily benefits households in a very good financial position,” it says in their proposals for a reform of property taxation.

According to the authors, the tax benefits have also contributed to the sharp rise in property prices.

Real estate ownership therefore makes up more than half of the total wealth in Germany, and the wealthiest ten percent of German households own 70 percent of the real estate that they do not use themselves.