Panama Proposes Tax Exemption on First Home Sales Up to B/.120,000

The Panamanian government has put forward a new initiative to make homeownership more attainable for a broader segment of the population. The Cabinet Council approved a bill that would exempt the Transfer Tax on Real Estate (ITBMI) for the initial sale of new homes valued up to B/.120,000. This proposal, spearheaded by the Minister of Economy and Finance, Felipe Chapman, seeks to facilitate access to housing for families with moderate and low incomes. Simultaneously, it aims to invigorate the construction industry, a sector known for its significant job creation potential. The measure modifies existing legislation, including Law 106 of 1974 and Law 4 of 1994. Minister Chapman explained that the exemption would apply to the first sale of new homes, provided the transaction is finalized within two years of the occupancy permit being issued. He emphasized that this targets housing for middle-income families, removing a significant tax burden for initial purchases up to B/.120,000. The goal is to help Panamanian families, particularly those with lower incomes, achieve their dream of owning a home. The proposed legislation also outlines provisions for homes priced above B/.120,000 but not exceeding B/.200,000. In such cases, the ITBMI would only be calculated on the amount exceeding B/.120,000, using a preferential scale ranging from 0.5% to 1.8%. Importantly, the bill designates the seller as responsible for this tax, prohibiting any attempt to pass this cost onto the buyer through agreements. Minister of Housing and Territorial Planning, Jaime Jované, highlighted that this measure is part of a broader strategy to expand access to housing solutions and bolster the construction sector. He noted that over 6,200 housing units, previously abandoned, have been revived and completed during the first 24 months of the current administration. Further initiatives, such as the "Abono Inicial Pa' Ti" program to reduce down payment impacts, are also planned. Minister for Canal Affairs and Secretary of Goals, José Ramón Icaza, added that the ITBMI exemption is a key component of the government's strategy to generate over 80,000 jobs by boosting the construction industry and restoring its pre-pandemic growth pace. The bill now proceeds to the National Assembly for discussion and potential approval.