Marekwica, Marcel and Schaefer, Alexander and Sebastian, Steffen (2013) Life cycle asset allocation in the presence of housing and tax-deferred investing. JOURNAL OF ECONOMIC DYNAMICS & CONTROL, 37 (6). pp. 1110-1125. ISSN 0165-1889,
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We study the dynamic consumption-portfolio problem over the life cycle, with respect to tax-deferred investing for investors who acquire housing services by either renting or owning a home. The joint existence of these two investment vehicles creates potential for tax arbitrage. Specifically, investors can deduct mortgage interest payments from taxable income, while simultaneously earning interest in tax-deferred accounts tax-free. Matching empirical evidence, our model predicts that investors with higher retirement savings choose higher loan-to-value ratios to exploit this tax arbitrage opportunity. However, many households could benefit from more effectively taking advantage of tax arbitrage. (C) 2013 Elsevier B.V. All rights reserved.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | OPTIMAL PORTFOLIO CHOICE; MARKET PARTICIPATION; OPTIMAL CONSUMPTION; EQUITY PREMIUM; HOUSEHOLD PORTFOLIO; ADJUSTMENT COSTS; RISK-MANAGEMENT; LABOR INCOME; INVESTMENT; PRICES; Portfolio choice; Housing; Tax-deferred investing; Tax arbitrage |
| Subjects: | 300 Social sciences > 330 Economics |
| Divisions: | Business, Economics and Information Systems > Institut für Betriebswirtschaftslehre > Lehrstuhl für Immobilienfinanzierung (Prof. Dr. Steffen Sebastian) Business, Economics and Information Systems > Institut für Immobilienenwirtschaft / IRE|BS > Lehrstuhl für Immobilienfinanzierung (Prof. Dr. Steffen Sebastian) |
| Depositing User: | Dr. Gernot Deinzer |
| Date Deposited: | 09 Apr 2020 05:14 |
| Last Modified: | 09 Apr 2020 05:14 |
| URI: | https://pred.uni-regensburg.de/id/eprint/16626 |
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