What Happened
The 2% Impuesto a las Transferencias de Bienes Inmuebles (ITBI) on new homes is drawing sharp criticism from Panama’s housing sector, which says the measure is driving up prices, slowing sales and weakening the broader construction chain.
In a discussion that included representatives from Convivienda, economist Eric Molino Ferrer and labor expert René Quevedo, participants warned that the tax does more than add to the cost of buying a home. They said it can also dampen investment, reduce employment and make it harder for families to enter the formal housing market.
Although the tax is paid by the developer to the Dirección General de Ingresos, industry leaders say the cost is ultimately passed on to buyers through higher sale prices.
Why the Tax Matters
For years, new homes were exempt from this tax to encourage construction and make homeownership more accessible. Second-hand properties were the ones subject to the charge. That exemption helped support a sector that is closely tied to jobs, mortgage lending and consumer spending.
Elisa Suárez, director of Convivienda, said any tax on housing ends up affecting the final price paid by families. She argued that the burden falls most heavily on lower-income buyers, who already struggle to meet mortgage requirements and save for an initial payment.
Because housing demand is highly sensitive to price, even a relatively small increase can delay purchase decisions and reduce sales. Lower sales, in turn, can discourage developers from starting new projects, weakening future supply.
Economic and Labor Impact
Molino’s economic analysis projected that about 6,700 mortgage loans would be delayed and 762 could be lost. The estimate also pointed to $526 million less in financing, as much as $1.3 billion in reduced economic activity and more than $120 million in lower tax collection.
Against that backdrop, Molino said the tax would generate only about $37 million, far less than the broader economic damage projected for the country.
Convivienda also said the market has already been under pressure. In 2025, 4,020 homes were sold, a drop of more than 34%, while the sector has posted declines of about 55% over the last two years. Construction activity has also fallen sharply in several regions, with drops above 40% in some segments.
Quevedo added that Panama’s labor market is already under strain, with losses of 24,000 formal private-sector jobs and a rise of 264,000 informal workers in recent years. He said weakening employment and wages reduce household purchasing power and limit access to mortgage credit.
Who Can Afford a Home
Molino said about 72% of the population does not qualify for a mortgage because their incomes do not meet bank requirements. He noted that a typical $75,000 home requires a monthly payment of around $300, which means the household must earn at least $1,000 a month, plus cover a $3,000 down payment and about $1,500 in tax.
For homes priced up to $120,000, he said the needed income rises to $1,500 a month, a level beyond the reach of many workers. He also pointed to high debt burdens, with many households already using 43% to 53% of their income to pay obligations.
Convivienda said the housing sector is aiming for 2026 sales of $634.75 million and about 5,530 units, but warned the tax could put those goals at risk. The country’s housing deficit remains at 180,000 homes, underscoring the challenge of expanding access while keeping prices within reach.
Industry leaders are urging the Ministry of Economy and Finance to revisit the Law on Preferential Interest and restore the exemption for new homes, arguing that housing should be treated as a driver of development rather than a fiscal burden.