Property Taxation and Optimal Capital Structure in Real Estate Investment

Review of Accounting and Finance - 2002
John F.McDonald1
1University of Illinois at Chicago

Tóm tắt

In this paper the capital asset pricing model is extended to include the local property tax, the corporate income tax, and a borrowing rate that increases with the percentage of property value borrowed. The optimal percentage to borrow increases with the risk‐free interest rate and the corporate tax rate, decreases with an exogenous increase in the borrowing rate, and does not depend upon the property tax rate. REITs and limited partnerships have no incentive to borrow in this model, so other motives for borrowing must be posited.

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Tài liệu tham khảo

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Review of Accounting and Finance

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