Panama approves ITBI tax exemption for first homes up to $120,000

Panama's National Assembly has approved a bill in its first debate that offers a significant tax break for first-time homebuyers. The legislation, project 661, aims to exempt the Transfer Tax on Real Estate (ITBI) for the initial sale of new homes valued at $120,000 or less.

This initiative amends Article 4 of Law 106 of 1974, a regulation that has governed the ITBI for over five decades. The approval comes at a time when housing costs are a major economic concern for Panamanian families. The bill provides a two-year window for eligibility, covering sales finalized after the law takes effect and also those with occupancy permits issued prior to the law, provided the transaction is completed within two years of the permit's issuance and meets other requirements.

Proponents of the bill, including Víctor Castillo, president of the Economy and Finance Commission, stated that the approval demonstrates a commitment to citizens, particularly those with lower incomes, by providing a concrete advantage in acquiring their first home. Minister of Economy and Finance Felipe Chapman described the measure as having a "profound social impact," aiming to help families, especially those with lower incomes, realize their dream of homeownership.

Chapman further explained that eliminating the ITBI directly reduces the cost of a property transaction. He positioned this reform as part of a broader package of measures by the national government to improve access to housing. The first debate saw participation from the Minister of Housing and Territorial Planning, Jaime Jované, and representatives from the real estate sector, indicating a wide consensus among the executive, legislative branches, and the construction industry.