Property Tax Web Series

Abstract

Shared occupancy arrangements are on the rise in recent years due to affordability constraints in homeownership. This article examines for the first time the property tax compliance behavior of shared dwellings, where homeowners rent out part of their own home to tenants. Using administrative-level data from Ghana, where homeowners are responsible for tax payments, we reveal that shared dwellings, compared to pure owner-occupied homes, are more likely to be in tax arrears. Their noncompliance is more sensitive to property tax hikes than homeowners, and greatest among those in the lower socio-economic status and in least affluent geographic areas. The results underscore the financial vulnerability of homeowners who rent out sections of their primary residence to tenants. Due to financial pressures and income constraints, they are less property tax compliant relative to conventional homeowners. We find that these effects are moderated by reciprocity, where compliance levels are higher in shared dwellings located closer to public services and amenities. The findings provide new insights for policymakers on the tax compliance effects arising in shared occupancies.

This paper was presented by Damian Damianov (Durham University, UK) on December 15, 2023 as part of the 2023-2024 Syracuse-Chicago Webinar Series on Property Tax Administration and Design. Santosh Anagol (University of Pennsylvania) was the discussant for this presentation.