Spatial distribution of income tax concessions for owner-occupied housing in Belgium: still an incentive for suburban development?

In Belgium, public authorities have considerably supported owner-occupied housing since the end of the nineteenth century, notably through tax concessions. The mechanism studied in this paper (in force for mortgages taken out from 2005 to 2014) allows households to deduct at marginal taxation rate an annually-limited amount of mortgage repayments for their owner-occupied home, including interests and capital under an aggregated form. In this paper, we emphasize the spatial distribution of this tax concession. To this aim, we use a sample of 34,132 geolocated tax returns (income 2010). Our results show that suburban areas benefit far more from this mechanism than urban areas, mainly because most of the beneficiaries live in these areas. In addition, we observe also that the benefits go for the most part to middle-to-high income families. We hypothesize that this tax relief acts as a catalyst in the spatial sorting of the population on the basis of socio-economic characteristics