Panama President Mulino Says that he will Make Changes to the Preferential Interest Rate and Eliminate the ITBI (Property Tax) on Homes
The president announced that he will present to the National Assembly a package of four or five laws to reactivate the economy, boost construction, promote private employment and facilitate access to lower-cost housing.
Panama’s preferential interest rate mortgage laws and ITBI (Real Estate Transfer Tax) regulate housing affordability and property sales through structured state-backed subsidies and transaction fees. Under recent legislation like Law 468, the state subsidizes up to 85% of bank mortgage interest for new primary homes valued up to $120,000, while the 2% ITBI transfer tax applies to property ownership changes.
Preferential Mortgage Interest Rate (Law 468)
- Maximum Home Value: Capped at $120,000 for new residential purchase eligibility.
- State Subsidy: The government covers up to 85% of the bank’s offered interest rate.
- Subsidized Rates & Terms: Segmented by property value and location (Region 1: Panama and West Panama; Region 2: Colón and other provinces) with rates generally around 4% for a non-renewable term of 5 to 10 years.
- Restriction: Applies strictly to new primary homes and is limited to one benefit per person.
ITBI Property Transfer Tax
- Standard Rate: Charged at 2% of the registered cadastral value or the agreed sale price, whichever is higher.
- Responsibility: Legally bound to and paid by the seller at the time of closing
- Exemptions: Prior broad exemptions for new home first transfers have been scaled back, though specific preferential loans or registered social interest windows may carry targeted relief.
Annual Property Tax Context (Impuesto de Inmueble)
- Primary Residence (Vivienda Principal / Patrimonio Familiar): The first $120,000 of cadastral value is completely tax-exempt (0%).
- Progressive Brackets: Values from $120,001 to $700,000 are taxed at 0.5%, and amounts above $700,000 are taxed at 0.7%.
The President of the Republic, José Raúl Mulino, announced that his Government is preparing new modifications to the law on preferential interest rates and to the collection of the 2% tax on real estate transfers (ITBI) applied to new homes, as part of a package of laws aimed at reactivating the economy and the construction sector. “I will be submitting to the Assembly a package of laws that I have called the economic reactivation laws,” said the president, who estimated that the set will consist of four or five projects considered “vital” to stimulate productive activity.
