Using a difference-in-difference framework, I investigate the long-run effect of the national property tax reform on house prices in Sweden. As a consequent of the reform, about 70 percent of the households got a reduction in yearly property tax payments after the implementation around 2007. Using data from about 450 000 sold houses, spanning from 2005 to 2015, I conclude that the reform is likely to have contributed to the severe increase in house prices in Sweden. As predicted by theory, the effect was greatest among the most expensive houses. Furthermore, the effect seems to have increased over time, indicating the reform did not just affect the house prices at the time of implementation, but continuously over the years. The later after the reform I investigated, the larger part of the net present value of the reduction is estimated to have been capitalized into the house price. The estimates are large, significant and robust to various choice of control variables and sensitivity tests. The pre-trends for the control- and treatment group(s) could however be questioned, so the result should be interpreted with caution.