Panama Assembly advances bill exempting ITBI for homes up to $120,000

Panama's National Assembly has advanced a bill that aims to ease the burden of the Property Transfer Tax (ITBI) for first-time homebuyers. The legislation, approved in its second debate, proposes a full 100% exemption from ITBI for the initial sale of new homes valued at B/.120,000 or less.

For homes exceeding this threshold, the bill outlines a progressive tax scale. Properties valued between B/.120,001 and B/.130,000 would face a 0.5% tax on the excess amount. This rate increases incrementally, reaching 1.8% for properties priced between B/.190,001 and B/.200,000.

Minister of Economy and Finance Felipe Chapman presented the initiative, emphasizing its role in addressing the ongoing concern of housing affordability for Panamanian families. The bill modifies a law regulating ITBI for over five decades. It also includes provisions for homes that have already received an occupancy permit before the law takes effect, provided the sale is completed within two years of the permit's issuance.

However, the bill faced criticism from some deputies. Ernesto Cedeño questioned its effectiveness and potential constitutional "violations," demanding a report from the Comptroller General's Office. The current ITBI rate stands at 2% of the sale price or cadastral value, whichever is greater.