What Happened
Panamanians buying a new home for the first time must now factor in a 2% Property Transfer Tax, known as ITBI, adding a new upfront cost to residential purchases.
The tax had been exempt for more than 50 years and had only applied to homes sold on the used or secondary market. The change affects buyers entering the new-home market and raises the cash needed at closing.
How Buyers Could Be Affected
Economist Eric Molino Ferrer said the policy shift has immediate budget consequences for households trying to buy a home. He noted that Panamanians earning above $1,000 a month are the group most likely to have enough room to save for a down payment and the tax, but that accumulating the money could take around 10 months because much of their income is already committed.
That extra burden may make it harder for some families to move from renting to ownership, especially in a market where savings requirements already place pressure on middle-income buyers. For first-time purchasers, the tax is now part of the full cost of entering the housing market.
Industry Response
Developers and builders are calling for a review of the decision to remove the exemption for new homes. Their argument centers on the impact the tax could have on demand for newly built properties, which are often a key driver of housing construction and employment in the sector.
Housing advocates and industry groups have long treated tax policy as a major factor in affordability. A higher closing cost can discourage buyers, slow sales, and complicate financing plans, particularly for households that must stretch to cover a down payment and other purchase expenses.
Why It Matters
The change comes at a time when housing affordability remains a major issue for many Panamanian families. By extending the transfer tax to new homes, the government is effectively increasing the cost of formal homeownership and changing the economics of new construction sales.
For buyers, the new rule means more cash is needed before signing a final deal. For the housing market, it may influence how quickly new units are sold and whether developers adjust pricing, incentives, or project plans in response.