Tax Evasion in the Housing Market: Identification and Exploration

Danny Ben-Shahar*, Roni Golan, Eyal Sulganik

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


The real estate market is recognized as a fertile ground for tax violations. Specifically, reporting a price lower than the true transaction price in order to avoid tax payments is a prevalent technique. We propose an empirical method for identifying housing transactions that are suspected of under-reporting. Based on all reported housing transactions in Israel over the period 1998–2015, we conclude that about 8% of the transactions are under-reported, with an average price report of 30% below the projected true price. Also, the likelihood to under-report is positively associated with the total tax liability and positively (negatively) associated with the crime rate in (the socioeconomic level of) the area in which the transaction occurs. Compared to single unit owners, real estate investors are less likely to engage in under-reporting. Our empirical approach may serve tax enforcement authorities in promoting tax collection in the real estate market.

Original languageEnglish
Pages (from-to)315-340
Number of pages26
JournalJournal of Real Estate Research
Issue number3
StatePublished - 2020


FundersFunder number
Eli Farjon
European Regional Science Association
Henry Crown Institute of Business Research in Israel
Israel Tax Authority
Survey of Israel
Tel Aviv University


    • Under-report
    • false price
    • housing
    • tax evasion


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