Polattimur, Hamza2013-06-202013-06-202013-06-20http://hdl.handle.net/2003/3040410.17877/DE290R-5477This paper studies the preferential tax treatment of housing that can be observed in many industrialized countries. It provides a rationale for it by means of an optimal taxation approach taking into account an important feature of housing, namely its usage as collateral. In a borrower-lender framework where private loans are assumed to be non-enforceable and have to be collateralized by housing, optimal fisscal policy should disburden constrained borrowers by subsidizing their housing.enDiscussion Paper / SFB 823;23/2013Collateral ConstraintsHousingOptimal Fiscal Policy310330620working paper