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Paper eres2001_180:
Do Tax-Deferred Exchanges Impact Purchase Price? Evidence form the Phoenix Apartment Market

id eres2001_180
authors Holmes, Andrew; Slade, Barrett A
year 2001
title Do Tax-Deferred Exchanges Impact Purchase Price? Evidence form the Phoenix Apartment Market
source 8th European Real Estate Society Conference (26-29 June 2001) Alicante, Spain
summary Many authors have commented on the compliance risk associated with tax-deferred exchanges. However, no published studies explicitly address whether the risks associated with the exchange process impacts the price at which exchanged assets trade. Using a unique data set that separates buy and sell side transactions for non-direct exchanges, this study examines the price impact of tax-deferred exchanges on apartment transactions in the Phoenix, Arizona market. Consistent with the price pressure hypothesis originally developed by Scholes (1972) and Kraus and Stoll (1972), the data show that exchange participants pay an economically significant premium to acquire replacement assets. A conventional hedonic price index is generated to investigate the rational bounds of the exchange premium. While the impact of an exchange is large, the premium is within the rational bounds.
series ERES:conference
content file.pdf (58,763 bytes)
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last changed 2009/07/10 18:07
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