Effects of Owner-occupancy
- Imputed rents disappear from measures of national income and output, unless figures are added to take them into account.
- The government loses the opportunity to tax the transaction. Sometimes governments have attempted to tax the imputed rent (Schedule A of United Kingdom's income tax used to do this), but this tends to be unpopular.
In population datasets like the CNEF imputed rent is estimated:
- for owner-occupiers, as a small percentage (4-6%) of the capital accrued in the property.
- for public housing tenants, as the difference between rent paid and the average rent for a similar property in the same location.
- for those living rent-free, as the estimate of the rent they would have to pay to rent a similar property in the same location.
- for renters in the private market, imputed rent is zero.
Read more about this topic: Imputed Rent
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