{"id":15559,"date":"2026-08-14T09:15:00","date_gmt":"2026-08-14T14:15:00","guid":{"rendered":"https:\/\/expat-times.com\/panama\/?p=15559"},"modified":"2026-08-13T19:19:07","modified_gmt":"2026-08-14T00:19:07","slug":"panama-housing-tax-relief-bill-targets-new-home-buyers","status":"publish","type":"post","link":"https:\/\/expat-times.com\/panama\/politics-government\/panama-housing-tax-relief-bill-targets-new-home-buyers\/","title":{"rendered":"Panama Housing Tax Relief Bill Targets New Home Buyers"},"content":{"rendered":"\n

A housing tax relief proposal delivered to Panama’s National Assembly on August 13, 2026 would exempt the first $120,000 of a new home’s taxable value <\/a>from the real estate transfer tax known as ITBI<\/a>. Economy and Finance Minister Felipe Chapman presented the measure and framed it as a direct response to citizen concerns about access to homeownership, especially for families with lower incomes. The bill now faces three rounds of legislative debate before any final approval.<\/p>\n\n\n\n

How the Housing Tax Relief Proposal Works<\/h2>\n\n\n\n

The initiative focuses on the first sale of new homes that meet requirements set out in the law. It does not restrict the benefit to homes priced at $120,000 or less. Instead, the proposal creates a progressive schedule for homes with taxable bases between $120,000 and $200,000, so a preferential rate applies only to the amount above the initial exempt $120,000.<\/p>\n\n\n\n

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2 bedroom apartment<\/figcaption><\/figure>\n\n\n\n

For homes up to $130,000, the rate on the excess would be 0.50 percent. It would rise to 1 percent for homes up to $150,000, 1.40 percent for homes up to $170,000, 1.60 percent for homes up to $190,000, and 1.80 percent for homes up to $200,000. When a home’s taxable base exceeds $200,000, the first $120,000 remains exempt while the general tax regime applies to the amount above that level. Chapman explained that this structure removes what he called a tax cliff.<\/p>\n\n\n\n

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“This scheme eliminates the jump, what we technically call the tax jump, or the sudden drop, preventing a higher home value from causing the buyer to lose the exemption on the initial bracket” [Translated from Spanish]<\/p>\n<\/blockquote>\n\n\n\n

Officials said the design came from market analysis, not improvisation, and is meant to keep a home purchase from suddenly becoming much more expensive because of a small price difference. Because the proposal targets first sales of new homes, it would not apply to resales or used properties, a distinction that aims to support new construction while containing the cost of the tax break.<\/p>\n\n\n\n

Return of the 2 Percent Transfer Tax<\/h2>\n\n\n\n

The ITBI equals 2 percent of a property’s transfer value. It began applying again to first sales of new homes in January 2026 after a prior exemption period expired. Under the law, the tax is formally the seller’s obligation, but housing and construction groups have cautioned that developers often shift that cost into the final price that buyers pay.<\/p>\n\n\n\n

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The previous exemption had been in place for years, and its expiration at the end of 2025 created uncertainty in the housing market. Chapman said the executive branch reviewed the impact of the tax’s return on the real estate market before drafting the bill.<\/p>\n\n\n\n

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“It is no longer just a hypothesis, it has been validated with data” [Translated from Spanish]<\/p>\n<\/blockquote>\n\n\n\n

He explained that the tax burden can affect project viability and reach consumers, making the housing tax relief proposal a targeted correction rather than a broad theoretical change.<\/p>\n\n\n\n

Replacement Revenue and Constitutional Requirements<\/h2>\n\n\n\n

Because the housing tax relief measure would lower income that feeds the national budget, it falls under Article 276 of Panama’s Constitution. That provision forces lawmakers to identify replacement revenue whenever a bill modifies budgeted income. Chapman confirmed the executive branch will introduce a second bill to compensate for the fiscal cost of the exemption.<\/p>\n\n\n\n

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Felipe Chapman Interview by https:\/\/www.youtube.com\/watch?v=i8Yy8x28szE<\/figcaption><\/figure>\n\n\n\n

He framed both proposals as part of a single fiscal strategy.<\/p>\n\n\n\n

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“Both initiatives make up a responsible fiscal strategy” [Translated from Spanish]<\/p>\n<\/blockquote>\n\n\n\n

The minister said the goal is to balance a social objective, making it easier to buy a first home, with the need to maintain stable public finances. He asked deputies to support the initiative as it moves through the legislative process.<\/p>\n\n\n\n

Mortgage and Construction Market Consequences<\/h2>\n\n\n\n

Prior estimates from the housing organization Convivienda suggest the ITBI could delay about 6,700 mortgage loans and reduce financing by roughly $526 million, creating negative effects for economic activity. Builders and real estate developers have argued that transfer taxes can slow new project sales and hurt households that rely on credit to buy a home.<\/p>\n\n\n\n

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Mortgage by Nick Youngson CC BY-SA 3.0 Pix4free<\/figcaption><\/figure>\n\n\n\n

Panama’s construction sector has traditionally been a key engine for employment and growth, and home purchase decisions often hinge on closing costs and monthly mortgage payments. A transfer tax added to the price can make a meaningful difference for first-time buyers. Chapman argued that the bill’s progressive design would avoid punishing buyers who choose slightly more expensive homes, while still preserving revenue from higher-value properties.<\/p>\n\n\n\n

The proposal now enters the formal legislative track in the National Assembly<\/a>, where deputies will hold three debates. If it passes, the measure would reshape how first sales of new housing are taxed and could offer thousands of families a clearer route toward buying their first home.<\/p>\n\n\n\n