Panama to exempt ITBI tax on homes up to $120,000

Panama's cabinet has approved a bill to be presented to the National Assembly that will exempt the purchase of new homes valued up to $120,000 from the Property Transfer Tax (ITBI). This initiative aims to revitalize the real estate sector and boost the construction industry.

The ITBI, a 2% tax on the value of property in real estate transactions, was previously exempted but reinstated with a new preferential interest law. The government now seeks to encourage home construction and facilitate access to homeownership for lower-income families.

"It is an exemption for a home up to $120,000 that is relatively good for low-income individuals and also begins, on a progressive scale, to reduce the benefit of the exemption up to homes of $200,000, to support young professionals," explained Jaime Jované, Minister of Housing and Territorial Planning.

Jované specified that the first $120,000 of a home's value will be ITBI-exempt, applicable to a first-time home purchase. Beyond that amount, a progressive exemption scale will apply. He also noted that real estate developers calculate all costs and incorporate them into the final property price, advising buyers to review contract details regarding these costs. This measure is part of the government's broader efforts to promote the construction of affordable housing.

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It is an exemption for a home up to $120,000 that is relatively good for low-income individuals and also begins, on a progressive scale, to reduce the benefit of the exemption up to homes of $200,000, to support young professionals.