Boquete, Panama

Panama Government Extends Homeowner’s Tax Exemption Law

Jaime Figueroa Navarro
CEO & Managing Director
Panama All In One, Inc.
www.panamaallinone.com

The homeowner’s tax incentive allowing new homes and condo buyers a 20-year tax-exemption period, has been extended by the government of Panama. This tax exemption, which expired August 31, 2005, was extended and is now valid for homes and condos purchased, or with a valid building permit, from September 1, 2005 to August 31, 2006.

The extension of this law allows foreign investors and retirees significant savings in their real estate investment. If we take, for example, a $300,000 new home in Florida, the homeowner’s tax bill, depending on its location, is approximately $10,000 per year. Taking in consideration that home values went up 24% last year in Broward County alone, it would not be far-fetched to state that the homeowner’s tax savings by a retiring couple that moved to a $300,000 home in Panama vis-à-vis Florida would be approximately $300,000 during the 20-year tax exemption period (2005-2025). That’s equivalent to 100% of the value of home!

Additionally, there is currently a law draft in the Legislature to stimulate real estate developers, with the following clauses:

1. Tax exemption on all merchandise and equipment imported for project development.
2. Tax exemption on commercial and industrial improvements within the projects.
3. Tax exemption on residents’ international phone call taxes.
4. Tax exemption or arrival or landing fees on airports or piers built by the developers.
5. Elimination of income tax payments on interest earned generated by lenders on real estate projects investments.

The draft states that this benefit will only be applicable to promoters with a minimum $2 million investment.

By eliminating taxes to retirees and promoters, there will be an increase in home sales and expenses on domestic services, which will eventually have a trickle down effect on the economy and significantly lower the unemployment rate. For example, in Boquete, where there are major development projects, there is 0% unemployment and new workers have to be brought in from as far as David on a daily basis.

Thus, these two fiscal incentives will help in promoting Panama as the #1 retirement destination in the world by creating more quality infrastructure to meet the increasing demand from U.S. and European investors and retirees.

Whenever considering Panama as your retirement or second home investment destination, remember that Panama All In One offers the best 8-day Investment Seminar & Tour alternative. We invite you to review the detailed itinerary in our website and if you have any questions or comments, please don’t hesitate to contact us at your convenience.