Panama has introduced a preferential real estate transfer tax regime for the first sale of newly constructed homes, providing a full exemption on the first PAB 120,000 of the taxable base and reduced progressive rates on qualifying sales up to PAB 200,000. The measures took effect on 1 September 2026, with a transitional 30-month window for properties with earlier occupancy permits.
Panama has published Law No. 546 of 31 August 2026, in the Official Gazette, which modifies Article 4 of Law 106 of 1974 to establish a preferential tax regime for the first sale of new housing units.
The primary focus is a tax exemption on the first PAB 120,000 of the sale price for newly constructed homes, provided the sale occurs within two years of the occupancy permit. For properties valued between PAB 120,000 and PAB 200,000, the law introduces a progressive tax scale ranging from 0.50% to 1.80% applied only to the amount exceeding the exempt base.
Entering into force on 1 September 2026 (the day following its publication), the law aims to stimulate the housing market by offering real estate transfer tax exemptions and reduced progressive rates.
The main provisions of the law are as follows:
The two-year window and the base exemption
The tax benefit applies where the purchase and sale are completed within two years of the occupancy permit, with the first PAB 120,000 of the taxable base fully exempt from real estate transfer tax. The law also protects buyers by making void any contractual clause requiring them to pay, reimburse, or assume the tax, which remains the seller’s sole responsibility.
Reduced progressive rates (Taxable base between PAB 120,000 and PAB 200,000)
When the taxable base is greater than PAB 120,000 but does not exceed PAB 200,000.00, the PAB 120,000 exemption is preserved, and a preferential progressive scale applies exclusively to the portion of the base imponible exceeding PAB 120,000:
- More than PAB 120,000 up to PAB 130,000: 0.50% on the excess.
- More than PAB 130,000 up to PAB 150,000: 1.00% on the excess.
- More than PAB 150,000 up to PAB 170,000: 1.40% on the excess.
- More than PAB 170,000 up to PAB 190,000: 1.60% on the excess.
- More than PAB 190,000 up to PAB 200,000: 1.80% on the excess.
The change in bracket does not cause the loss of the PAB 120,000.00 exemption; the rate is applied solely to the margin above that threshold
Properties over PAB 200,000
If the taxable base exceeds PAB 200,000.00, the transaction still retains the initial PAB 120,000.00 exemption. However, the entire portion exceeding PAB 120,000.00 is calculated using the rates and regulations of the general tax regime under Article 1 of the law. In these cases, the preferential progressive scale described above does not apply to any part of the excess.
Paperwork and penalties
Sellers seeking the tax benefit must declare in the public sale deed that the property is a new housing unit, its first sale, and falls within the two-year eligibility period, with the occupancy permit details recorded in the deed.
No prior DGI exclusion certificate is required, but sellers must report the exemption to the DGI after the transaction.
False declarations or improper use of the exemption result in payment of the omitted tax, applicable surcharges and interest, and potentially administrative, tax, civil, or criminal penalties.
The transitional rule for existing permits
For new housing units with occupancy permits issued before the law took effect, the deadline to formalise the sale is extended to 30 months from the permit’s issuance date, provided all other conditions are met. Sales completed before the law’s effective date remain governed by the tax rules applicable at the time of the transaction.
