Friday, May 2, 2008
Dear International Living Panama Roundtable Member,
It’s official: you can get a 20-year property tax exemption if you buy a newly constructed residence in Panama…provided it’s completed before the deadline.
In the January 2008 issue of Panama Insider, we mentioned the rumor that the Panama government might extend, once again, the 20-year property tax exemption. The exemption was devised decades ago as a means to impulse the real estate industry and the economy—it was never meant to be permanent—and many agree the goal has been achieved. So when the government announced months ago that it would not extend the exemption past the August 2007 expiration date, locals and insiders were not surprised.
The government did commit to continuing exemption periods for new residential constructions, but explained that property would be allotted exemptions of five to 15 years, depending on the value of the construction. So regardless, new residence owners would still have a money-saving grace period, albeit not as long.
In a surprising turn of events, however, Housing Minister Balbina Herrera announced last December that the 20-year tax exemption would be extended. The reason for the extension? The same as last time—it’s good for the economy and helps many low-income Panamanians.
Panama attorney Rainelda Mata-Kelly explains the terms of this latest extension: "Law 21 of April 2008 extends the 20-year exemption for residential constructions with a construction permit approved by July 1, 2009, provided the construction declaration is registered in a public deed with the Public Registry (occupancy permit is also required) by Dec. 31, 2011."
Bottom line: If you obtain the construction permit before July 2009 and construction on your new residential property is completed in time, you won’t pay property tax for 20 years from the date of completion. Talk about mega savings.
Just remember, even if you buy a resale, any remaining exemption time is transferred to you. For example, if you buy an exempted property that was built in 2000, you won’t pay property tax on it till 2020. Also, land itself is not exempted and will continue to incur property taxes if its value is above $30,000.
Rainelda Mata-Kelly practices commercial and shipping law at the Law Offices of Rainelda Mata-Kelly. A graduate of Cornell Law, she has over 20 years of experience and has been legal adviser to prestigious groups like the Colon Free Trade Zone Merchants Association.Website: www.mata-kelly.com.
Best regards,
Jessica Ramesch
Editor, Panama Insider
IL Panama Roundtable News
