Housing and tax-deferred retirement accounts / by Anson T.Y. Ho and Jie Zhou. : FB3-5/2016-24E-PDF

Assets in tax-deferred retirement accounts (TDA) and housing are two major components of household portfolios. In this paper, we develop a life-cycle model to examine the interaction between households’ use of TDA and their housing decisions. The model generates life-cycle patterns of home ownership and the composition of net worth that are broadly consistent with the data from the Survey of Consumer Finances. We find that TDA promotes home ownership, as households take advantage of the preferential tax treatments for both TDA and home ownership. They substitute TDA assets for home equity by accumulating wealth in TDA and making smaller down payments (taking out bigger mortgages); consequently, they become homeowners earlier in their lives. On the other hand, housing-related policies, such as a minimum down payment requirement and mortgage interest deductibility, affect households’ housing decisions more than their use of TDA.

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Renseignements sur la publication
Ministère/Organisme Bank of Canada.
Titre Housing and tax-deferred retirement accounts / by Anson T.Y. Ho and Jie Zhou.
Titre de la série Staff Working Paper, 1701-9397 ; 2016-24
Type de publication Série - Voir l'enregistrement principal
Langue [Anglais]
Format Électronique
Document électronique
Note(s) "May 2016."
Includes bibliographical references (p. 33-37).
Information sur la publication [Ottawa] : Bank of Canada, 2016.
Auteur / Contributeur Ho, Anson T. Y.
Zhou, Jie.
Description iii, 46 p.
Numéro de catalogue
  • FB3-5/2016-24E-PDF
Descripteurs Savings
Retirement
Housing
Modelling
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