When assessing the closing costs of a new home in Panama, buyers and developers should review whether the transaction qualifies for relief from the Real Estate Transfer Tax, known locally as ITBI.
Law 546 of August 31, 2026, amends Article 4 of Law 106 of 1974. It establishes an exemption for the first B/.120,000 of the taxable base on a qualifying first sale of a new residential property, with preferential treatment for certain amounts above that threshold.
Before incorporating this benefit into a closing budget, review the property’s sale history, occupancy permit, applicable deadline, and draft deed.
How Is Transfer Tax Calculated on a Qualifying New Home?
For qualifying transactions, the applicable rate depends on the total taxable base. That rate applies to the amount exceeding B/.120,000:
| Total taxable base | Treatment of the amount above B/.120,000 |
| Up to B/.120,000 | Exempt |
| Above B/.120,000 and up to B/.130,000 | 0.50% |
| Above B/.130,000 and up to B/.150,000 | 1.00% |
| Above B/.150,000 and up to B/.170,000 | 1.40% |
| Above B/.170,000 and up to B/.190,000 | 1.60% |
| Above B/.190,000 and up to B/.200,000 | 1.80% |
| Above B/.200,000 | General transfer tax rules apply to the excess |
The preferential schedule uses the rate corresponding to the transaction’s total taxable base. It does not prescribe a cumulative calculation using successive marginal bands.
Example: A Taxable Base of B/.150,000
Assuming the transaction qualifies:
- Taxable base: B/.150,000.
- Exempt amount: B/.120,000.
- Remaining taxable amount: B/.30,000.
- Applicable preferential rate: 1.00%.
- Resulting ITBI: B/.300.
This is an illustrative calculation. The legal taxable base must be confirmed for the actual transaction; the advertised purchase price should not automatically be treated as the taxable base.
Our domestic tax advisory team can help review the calculation before closing.
Occupancy Permit Deadlines and Deed Requirements
The general rule requires the sale to be formalized within two years of issuance of the occupancy permit. A transitional provision allows thirty months for permits issued before the law took effect, provided the remaining conditions are met.
The seller must include sworn statements in the public deed confirming the new residential property status, first sale, and compliance with the deadline, together with occupancy permit details. A DGI exclusion certificate is unnecessary, but the benefit must be reported through the mechanisms established by the tax authority.
Review the Timeline Before Agreeing on a Closing Date
We recommend creating a transaction timeline that records:
- The occupancy permit issuance date.
- The proposed date for formalizing the sale.
- Outstanding legal and financing steps.
- The time needed to complete and review the deed.
- The reporting steps to be coordinated.
This helps identify transactions where delays could affect the planned tax treatment.
For developments with multiple units, keeping a separate timeline for each unit can improve coordination between sales, legal, and finance teams.
What Should Buyers Check in the Closing Cost Breakdown?
Buyers should request an itemized closing estimate and ask the seller or adviser to explain the assumptions behind each tax amount.
The review should identify the taxable base used, the proposed exemption, and the calculation of any remaining ITBI.
Law 546 also declares void contractual provisions requiring the buyer to pay, reimburse, or assume ITBI that legally belongs to the seller.
We recommend reviewing tax allocation clauses before signing the purchase agreement, especially where closing costs are presented as a single amount.
LAC Legal’s real estate team in Panama can assist with purchase agreements, title review, and transaction documentation.
A Document Checklist for Developers and Sellers
Before applying the anticipated benefit, we recommend bringing together:
- The occupancy permit and identifying details.
- Available title and transfer history.
- The purchase agreement.
- The draft public deed.
- The taxable base calculation.
- The proposed ITBI calculation.
- Supporting records for the relevant reporting.
This preparation allows the tax and legal teams to assess the transaction using the same information.
A coordinated tax management and compliance review can help align the closing documents with the proposed tax treatment.
Transfer Tax Relief and Other Housing Tax Questions
When seeking advice, identify the specific cost or benefit you need to assess:
| Question | Appropriate review |
| Tax treatment of the first sale of a new home | Law 546 and ITBI eligibility |
| Ongoing taxation of residential property | Property tax rules |
| Mortgage costs and subsidized interest | Financing arrangements |
| Bank charges associated with the loan | Banking rules and contract terms |
For ongoing property taxation, see our separate article on property tax, family property, and principal residence treatment in Panama.
Frequently Asked Questions
1. Which law governs this new home transfer tax benefit?
Law 546 of 2026, which amends Article 4 of Law 106 of 1974.
2. What should a developer review first?
We recommend checking the property’s transfer history, occupancy permit, and planned closing timeline.
3. What should a buyer request before signing?
An itemized closing estimate and an explanation of the tax treatment proposed for the transaction.
4. How should an international buyer prepare for a consultation?
Provide the purchase agreement, available property documents, and the proposed closing cost breakdown.
5. When should the exemption be reviewed?
Ideally, before finalizing the contract and closing schedule.
6. What if the contract requires the buyer to cover ITBI?
Obtain a legal review of the clause before accepting that cost.
7. How can developers organize several pending sales?
Maintain a separate file and deadline tracker for each unit.
8. What must be checked before using the calculation example?
The transaction’s eligibility and legally applicable taxable base.
9. Which teams should coordinate the assessment?
We recommend involving the legal, tax, accounting, and sales teams responsible for the closing.
10. What records should be kept after completion?
As a practical measure, retain the deed, tax calculation, supporting property documents, and reporting evidence together.
Review Your New Home Transaction Before Closing
If you are buying, selling, or developing new residential property in Panama, LAC Tax and LAC Legal can help assess the proposed transfer tax treatment and review the transaction documents.
Contact our team to discuss your property transaction.
Specialist contact: Raúl González Casatti.
Email: rgonzalez@lacgrp.com
Legal source: Law 546 of August 31, 2026, published in Official Gazette 30601-B.