Introduction
With the entry into force of Law 468 of 2025, the former Law 3 of 1985 is completely replaced, establishing a new state subsidy regime for mortgage loan interest. This law not only redefines the subsidy brackets but also introduces important tax limitations that both taxpayers and tax advisors must take into account.
In this article, we address the essential aspects of Law 468, its tax framework, and how it influences the tax decisions of individuals and financial institutions.
What does Law 468 of 2025 establish?
Law 468 redefines the preferential interest rate regime for primary residence mortgage loans, under the following key conditions:
- Applies only to the purchase of new homes (not remodeling or used properties).
- A maximum purchase price of B/.120,000 is established.
- Subsidies are segmented according to the value of the property and its location (Region 1: Panama and West Panama; Region 2: Colón and the rest of the country).
- The subsidy can cover up to 85% of the interest rate offered by the bank.
- The benefit is unique per person and does not apply to those who have already received previous subsidies.
Subsidy Sections by Location and Price
| Region | Stretch | Property Price | Duration of the Subsidy | Maximum Subsidized Rate |
| Panama / West | 1 | Up to B/.50,000 | 8 years | 5.0% |
| 2 | B/.50,000.01 – B/.80,000 | 7 years | 4.5% | |
| 3 | B/.80,000.01 – B/.120,000 | 5 years | 4.0% | |
| Columbus / Interior | 1 | Up to B/.50,000 | 8 years | 5.5% |
| 2 | B/.50,000.01 – B/.80,000 | 8 years | 5.5% | |
| 3 | B/.80,000.01 – B/.120,000 | 5 years | 4.0% |
Tax Restrictions: What every taxpayer should know
- Non-deductible from income tax:
During the validity period of the subsidy, the taxpayer will not be eligible for the mortgage interest deduction provided for in Article 697 of the Tax Code. - Mandatory reporting on income tax returns:
Both banks and debtors must expressly declare whether the loan is a preferential mortgage loan, submitting the corresponding certification. - 2% ITBI exemption valid only until December 31, 2025:
Loans under the preferential interest rate regime with a promise of payment letter and registration in the Public Registry before December 31, 2025, will be exempt from the Real Estate Transfer Tax (2%).
Starting in 2026, this exemption disappears, which implies an additional cost for future buyers who do not formalize their loans before that deadline.
Tax Recommendations
- Advance tax planning: Consider whether you’re better off taking advantage of state subsidies or the annual mortgage interest deduction.
- Formalize before December 31, 2025: To obtain the ITBI exemption, it is essential to comply with the letter of promise and timely registration requirements.
- Professional consultation: Each situation deserves an individual analysis, considering income, interest rates, and wealth goals.
What services does LAC Tax offer in response to this new law?
– Personalized tax assessment.
– Advice on structuring mortgage financing.
– Verification of tax compliance with the DGI (General Directorate of General Taxes).
– Legal procedures for property tax exemptions and primary residence registration.
Schedule your free consultation
At LAC Tax, we help you make informed and profitable decisions. Schedule an appointment with one of our tax experts and receive a tax assessment tailored to your situation.
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