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The impact of the interest and capital mortgage deduction on homeownership in Belgium: a difference-in-differences approach

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Abstract
In 2005, a system of mortgage interest, insurance premiums and capital deduction (MICPD) was introduced in Belgium to replace and simplify the previous system of fiscal housing benefits. Mortgage interest, capital amortizations and insurance premiums were assembled into one single deduction package. We use household-level data from 2001 to 2010 to evaluate the impact of the MICPD on the homeownership rate in Belgium. A difference-in-differences approach is introduced to compare the proportion of new homeowners between two groups: a treatment group, which is affected by the MICPD and a control group which is not. We find that the MICPD does not succeed in stimulating the number of homeowners, due to its capitalization into higher house prices. House prices are estimated to be on average 9% higher after the introduction of the MICPD.
Keywords
Difference-in-differences analysis, mortgage interest deduction, homeownership

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MLA
Hoebeeck, Annelies, and Carine Smolders. “The Impact of the Interest and Capital Mortgage Deduction on Homeownership in Belgium: A Difference-in-Differences Approach.” American Real Estate and Urban Economics Association, Proceedings, 2014.
APA
Hoebeeck, A., & Smolders, C. (2014). The impact of the interest and capital mortgage deduction on homeownership in Belgium: a difference-in-differences approach. American Real Estate and Urban Economics Association, Proceedings. Presented at the American Real Estate and Urban Economics Association, Reading, UK.
Chicago author-date
Hoebeeck, Annelies, and Carine Smolders. 2014. “The Impact of the Interest and Capital Mortgage Deduction on Homeownership in Belgium: A Difference-in-Differences Approach.” In American Real Estate and Urban Economics Association, Proceedings.
Chicago author-date (all authors)
Hoebeeck, Annelies, and Carine Smolders. 2014. “The Impact of the Interest and Capital Mortgage Deduction on Homeownership in Belgium: A Difference-in-Differences Approach.” In American Real Estate and Urban Economics Association, Proceedings.
Vancouver
1.
Hoebeeck A, Smolders C. The impact of the interest and capital mortgage deduction on homeownership in Belgium: a difference-in-differences approach. In: American Real Estate and Urban Economics Association, Proceedings. 2014.
IEEE
[1]
A. Hoebeeck and C. Smolders, “The impact of the interest and capital mortgage deduction on homeownership in Belgium: a difference-in-differences approach,” in American Real Estate and Urban Economics Association, Proceedings, Reading, UK, 2014.
@inproceedings{5695456,
  abstract     = {{In 2005, a system of mortgage interest, insurance premiums and capital deduction (MICPD) was introduced in Belgium to replace and simplify the previous system of fiscal housing benefits. Mortgage interest, capital amortizations and insurance premiums were assembled into one single deduction package. We use household-level data from 2001 to 2010 to evaluate the impact of the MICPD on the homeownership rate in Belgium. A difference-in-differences approach is introduced to compare the proportion of new homeowners between two groups: a treatment group, which is affected by the MICPD and a control group which is not. We find that the MICPD does not succeed in stimulating the number of homeowners, due to its capitalization into higher house prices. House prices are estimated to be on average 9% higher after the introduction of the MICPD.}},
  author       = {{Hoebeeck, Annelies and Smolders, Carine}},
  booktitle    = {{American Real Estate and Urban Economics Association, Proceedings}},
  keywords     = {{Difference-in-differences analysis,mortgage interest deduction,homeownership}},
  language     = {{eng}},
  location     = {{Reading, UK}},
  pages        = {{28}},
  title        = {{The impact of the interest and capital mortgage deduction on homeownership in Belgium: a difference-in-differences approach}},
  year         = {{2014}},
}