YOU HAVE ABOUT 8 MONTHS LEFT TO FIND YOUR PIECE OF PARADISE!
April 17, 2008
Although there have been announcements and pronouncements about the exoneration being extended, it does not become law until it is published in the Gazette. That came out April 15, 2008. You now have until the first of July 2009 to get your building permit and the end of 2011 to get the occupancy permit. Anyone wishing to take advantage of this 20-year tax exoneration on new construction needs to act within the next 8-10 months.
Here is an average time line to go through the entire process. Time frame if you started today:
Come to Panama and find a home site-90 days-August 2008
Wait for the closing 60 days-October 2008
Hire and architect to design the home. Wait 4-6 months for the design. March 2009
Get the building permit-30 days-April 2009
Get quotes from builders to build your dream home. 60 days- June 2009
Select and contract the builder- July 2009
Wait 12-18 months for construction- February 2011
Acquire your occupancy permit. March 2011
If all goes smoothly you have about an 8-10 month window in order to start your search.
From the Gaceta Asamblea Nacional
Ley 21 de martes 15 de abril de 2008.
"Que reforma la Ley 6 de 2005, sobre Equidad Fiscal y dicta otra disposición".
http://www.gacetaoficial.gob.pa/pdfTemp/26020/9984.pdf
1. Any constructions (construction permit) approved as of September 1, 2006 will be exempted from real estate taxes in accordance to the following schedule:
Residential Use:
- Up to US$ 100,000.00 --- Years of Exemption = 15
- Over US$ 100,000.00 and up to US$ 250,000.00 --- Years of Exemption = 10
- Over US$ 250,000.00 --- Years of Exemption = 5
Any Other Use (i.e. commercial):
- Any value --- Years of Exemption = 10
NOTE: The above law is true, regardless of when the improvements or construction is declared or registered before the Public Registry of Panama. These exemptions will apply, as long as the law is in force.
2. NEW LAW SAYS: now any construction permits approved before July 1, 2009 will be exempted from real estate taxes for 20 years, as long as the improvements or construction is declared or registered before the Public Registry of Panama on or before December 31, 2011. This applies to all constructions, including commercial.
NOTE: The above is true even for the construction permits issued as of September 1, 2006. In other words, in order to secure the 20-year exemption, the improvements or construction has to be recorded before December 31, 2011.
Since the enactment of Cabinet Decree No. 109 (1970), successive legislation have been passed offering tax benefits to developers. As the nation's largest single employer, the construction industry received these incentives to help bolster investment in this sector, which would in turn benefit the country's overall employment picture. It has been widely accepted that, as a result of these incentives purchasers of real property have also benefited.
Cabinet Decree No. 44 (1990), and its implementation through Resolutions No. 201-1622 in December 12, 1990, enunciates that the purchaser of residential units, apartments or single homes, built within the time table set forth in the Decree, is exempt from property tax (improvements value) for up to 15 years from when construction began. It is important to note that this exemption does not include property tax on land, but refers to the dollar value on all improvements on new construction. The developer also benefits from an exemption of income tax, if the earnings obtained from the construction are reinvested into new construction projects within two years; certain conditions apply. This tax incentive is similar in nature to those referred to in the United States as "the like kind exchange".
