What Happened
Panama’s Minister of Economy and Finance, Felipe Chapman, said he is open to reviewing proposals from the National Housing Council, known as Convivienda, on the impact of the real estate transfer tax on new homes, as long as the analysis is technically supported.
Chapman said he had not yet examined Convivienda’s study and welcomed the chance to see it. His remarks came after the swearing-in of the new board of the Chamber of Commerce on Wednesday night, April 8.
Convivienda argues that applying the 2% transfer tax to new homes raises purchase costs for buyers because it adds to the down payment. The group also says the tax brings in relatively little revenue compared with the broader economic losses that could result if construction slows and housing demand weakens.
The Housing Sector’s Warning
Convivienda’s study, presented Wednesday before an audience that included Tax Authority director Camilo Valdés and Deputy Minister of Economy Fausto Fernández, says the tax could affect about 6,700 mortgage loans that would be delayed and 762 that could be lost entirely.
The group estimates that would mean $526 million less in financing and a decline of up to $1.3 billion in economic activity, along with more than $120 million less in tax collection when income tax and sales tax effects are included. By contrast, the transfer tax itself would generate about $37 million, according to the calculations presented by the housing sector.
For builders and prospective homeowners, the issue goes beyond a single fee. It touches the pace of new housing sales, mortgage approvals, and construction activity at a time when the sector is sensitive to higher costs and tighter financing conditions.
Not a New Tax, But the End of an Exemption
Chapman stressed that the transfer tax is not new. What changed, he said, was the end of the exemption that had applied to new homes. He explained that the tax already existed, but new housing had been exempted from it.
Convivienda representatives also noted that for more than 50 years, Law 106 of 1974 exempted the first sale of new homes from the 2% ITBI, applying the tax only to used properties. That changed with Law 468 of 2025 and a later modification, Law 481, which is now in force.
The exemption expired on December 31, 2025, and from January 2026 the tax has also been charged on new homes. Convivienda says that has increased final purchase prices for buyers entering the housing market.
Broader Economic Signals
Chapman also pointed to the World Bank’s projection of 3.9% growth for Panama and said global developments continue to shape the country’s outlook. He noted that higher oil prices can, paradoxically, improve the competitiveness of the Panama Canal because the waterway offers a shorter route for shipping.
He said the government is closely monitoring the impact of tensions in the Middle East on the world economy, but he does not see the conditions for a recession in Panama at this time.
The minister also said current international pressures make it difficult to reduce subsidies. With fuel prices rising, he said the country is not in the right conditions to cut them and should instead preserve room in the budget to respond to unexpected shocks.
Chapman added that the government is working on new legislative initiatives, including adjustments to the corporate law framework and special laws. For now, the housing tax debate has become part of a larger discussion about fiscal policy, construction, and affordability in Panama.