Tax allowances for own-homes in Europe

Prices of asset titles and permanent goods, e.g. houses, fluctuate more strongly than prices of non-permanent goods. The reason for this is that a strongly varying demand for permanent goods clashes with an inelastic supply, which can react to demand and price incentives only slowly. It is generally held to be true that price reactions to demand changes are the more pronounced the less the price elasticity of demand is. This relationship is relevant for understanding the effect of preferential fiscal treatment for the purchase of permanent goods, e.g. a house. This tax benefit does not only reduce the net (after-tax) costs but also the price elasticity of demand for houses and thereby indirectly the extent of price fluctuations in this market. This article provides an overview of the EU endorsed tax benefits for the construction or purchase of an own-home.