New Properties Built by Dec. 31, 2009, Will Be Exempt

January 2, 2008
Panama City, Panama

We have some very good news to kick off the new year. As you know, one of the big incentives to buy property in Panama has traditionally been the 20-year property tax exemption law, first passed in 1990 to encourage economic development and investment. The exemption freed buyers of new homes or condos from paying property tax (improvements value) for up to 20 years.

The exemption has been extended several times, but it finally expired Aug. 31, 2007. The government introduced new exemptions of five to 15 years, depending on the value of the property. Though real estate companies, construction companies, and developers lobbied for the return of the 20-year blanket exemption, the government refused. Until now...

The government of Panama has had a change of heart. On Saturday, Dec. 22, Housing Minister Balbina Herrera announced that the 20-year tax exemption has been extended through Dec. 31, 2009. "We are doing this not only because the construction sector is important to the national economy, but also because 95% of the new construction is for nationals and only 5% for foreigners," said the minister, seemingly in response to critics that say the exemption benefits wealthy expats rather than the struggling Panamanians it was intended to help.

Bottom line: If construction on your new residential property is complete by Dec. 31, 2009, you won't pay property tax for 20 years from the date of completion. Talk about mega-savings.

Even if you buy a resale, the remaining exemption time is transferred to you. For example, if you buy a residential property that was built in 2000, you won’t pay property tax on it till 2020.

Just remember, land itself is not exempted and will continue to incur property taxes if its value is above $30,000.

Best regards,

Jessica Ramesch
Editor, Panama Insider

P.S. If you've been planning to buy property in Panama, this new exemption extension is reason enough to get moving and make it happen. Start the new year with concrete plans to finally visit Panama and see for yourself why we're so keen on it. The July 2008 Live & Prosper in Panama Seminar is just the ticket—you'll get all the information you need from the best Panama experts all in one fun-packed seminar. Contact our Events team at 1-866-381-8446 (toll free), 1-410-230-1243, or Events@InternationalLiving.com for more information…and remember, the early bird gets additional savings.