This paper considers some allocative effects in the (owner-occupied) housing market that may result from the recent reform of personal income tax in Spain. In particular, the long-run effects on the stock of residential capital and the price of housing assets are analyzed. Two models of the housing market are presented (one with exogenous prices and the other with endogenous prices) and the user cost of housing capital before and after the reform is compared. It is argued that the reform of income tax may have two different effects. On the one hand, there is an "income effect", which will lead to an increased demand for housing services/stock. On the other, the "price effect", associated with the change in the user cost, becomes ambiguous, and depends on the marginal tax rates faced before the reform. The conclusions drawn from the analysis suggest that the net result of both effects is far from being clear-cut.

Keywords: housing, personal income tax, tax reform, user cost of residential capital.
JEL classification: H22, H24, R21.