Panama Law 468 (2026): End of ITBI Exemption on New Homes

Published April 28, 2026 · Last updated: August 14, 2026

⚡ Update — August 2026. On August 13, 2026 the Government presented a bill to the National Assembly that would restore the ITBI exemption for the first sale of new homes up to B/.120,000, with reduced rates up to B/.200,000. It is not law yet: until it is approved and published in the Official Gazette, every first sale still pays the 2%. The bill's details are further down in this guide.

If you are buying a new home in Panama in 2026, there is one change that weighs directly on your closing costs and that many buyers still do not know about: Law 468 of April 24, 2025 repealed the Real Estate Transfer Tax (ITBI) exemption that previously applied to the first sale of new homes. From the law's effective date, every first sale of real estate pays the 2% ITBI, except for a narrow transitional carve-out that expired on December 31, 2025. In practice this means up to $9,000 in additional costs on a new $450,000 home that would have been exempt before.

If you are already looking at apartments for sale in Panama, understanding this change is what separates a correct cost projection from a five-figure surprise at the notary. This guide explains what changed, why, how it affects your purchase, and what to do to minimize the fiscal impact.

What Changed: The Repeal of Article 4 of Law 106 of 1974

For more than 50 years, Panama had a fiscal benefit designed to incentivize residential construction: Law 106 of October 30, 1974 established in its Article 4 that first sales of new homes were exempt from the 2% ITBI. It was one of the tools that made Panama competitive against other Latin American markets for investors and residential buyers.

Law 468 of April 24, 2025, published in Digital Official Gazette No. 30264-A, changed this. Its Article 13 expressly repeals Article 4 of Law 106 of 1974. As of the new law's effective date (April 25, 2025), all first sales of real estate are subject to the 2% ITBI on the greater of the sale price or the cadastral value.

The government justified the measure as a fiscal balancing tool: the exemption represented substantial uncollected revenue — per reports from Telemetro and local outlets, this was a benefit that had been operating for half a century — and the Ministry of Economy and Finance (MEF) deemed it excessive in the context of post-pandemic budget pressure. The same Law 468, in other articles, reorganized the Preferential Interest regime (Law 3 of 1985) with updated tiers analyzed in our Preferential Interest Law 2026 guide.

What the ITBI Is and Why It Matters

The Real Estate Transfer Tax (ITBI) is a tax paid when title to a property changes hands. Its rate is 2% on the greater of the declared sale price or the cadastral value of the property.

Who pays it. Legally, the ITBI is paid by the seller. But in Panama practice it is a negotiable point: in many transactions the parties agree the buyer pays it, especially when the seller is a developer who passes the cost through in the list price.

When it is paid. Before signing the public deed. The DGI (Directorate General of Revenue) issues a payment certificate without which the Public Registry will not record the sale.

What base it is calculated on. On the greater of the sale price declared in the public deed or the cadastral value on file. This means under-declaring the price to "save" on ITBI does not work if the cadastre is up to date.

Before vs After: The Numerical Impact

The difference between buying under the old regime and the current one is direct. Three typical scenarios:

Scenario 1: $200,000 apartment in an established zone

• Before (Law 106 in force): ITBI = $0 (first-sale exemption).
• After (Law 468): ITBI = $4,000.
• Impact: $4,000 added to closing.

Scenario 2: $300,000 new apartment in San Francisco or Marbella

• Before: $0.
• After: $6,000.
• Impact: $6,000 added.

Scenario 3: $450,000 apartment in Punta Pacifica or Costa del Este

• Before: $0.
• After: $9,000.
• Impact: $9,000 added.

For a couple buying their first new home, that additional cost can equal 1-3 months of mortgage payments. For an investor buying multiple units, it multiplies.

The Temporary Exception That Has Already Expired

Law 468 contained a transition article — Article 11 — that kept a very narrow carve-out alive until December 31, 2025. To qualify, the transaction had to meet all of the following simultaneously:

• Be a new home intended as the buyer's primary residence.
• Have a purchase price not exceeding B/.120,000.00.
• Be financed with a mortgage under Law 3 of 1985 (Preferential Interest regime).
• Have a bank-issued promise of payment letter.
• The transaction had to be executed and recorded between April 25 and December 31, 2025.

As of April 2026 this exception no longer exists. Every first sale pays ITBI regardless of price, financing or use. The only way to capture the carve-out — if your closing was recorded before December 31, 2025 — was to consolidate every step before that deadline.

If you are closing on a new home right now, there is no way to avoid the ITBI through the transition exception.

What Did NOT Change: Other Exemptions Still in Force

It is important to distinguish the ITBI from other real estate taxes that retain their exemptions. Law 468 only repealed the transfer tax (ITBI) exemption on first sales. These other benefits remain alive:

Annual property tax exemption (Law 66 of 2017): new homes with improvement values within the established ranges still receive between 5 and 20 years of annual property tax exemption. This is covered in detail in Property Tax and Fiscal Exemption.

Preferential Interest regime (Law 468 of 2025, which replaces Law 3 of 1985, as amended by Law 481): the mortgage rate subsidy remains in place and was actually modernized. The current tiers — up to $50K, $80K and $120K, for a first home — are analyzed in Preferential Interest Law 2026. This benefit reduces the mortgage rate, not the ITBI.

Heritage zone exemptions: Casco Viejo and other historic sectors retain special exemptions for restoration — up to 30 years for Type I, II and III properties restored with INAC approval.

Special Economic Area exemptions: the regimes of Panama Pacifico (Law 41 of 2004), Ciudad del Saber (Law 6 of 1998) and the Colon Free Zone preserve their fiscal benefits for companies and properties within their respective polygons.

In short: the specific change is that the first sale now pays the 2% ITBI. The other fiscal incentives that make Panama attractive for real estate investment — low annual property tax, dollarization, territorial tax base, accessible mortgage financing — remain intact.

How to Renegotiate the ITBI With the Developer

One of the questions we receive most often at PanamaProp these months is: can the ITBI be negotiated with the seller? The short answer is yes, and it depends on the project's stage.

Promises signed before April 25, 2025

If you signed a promise-to-purchase contract before Law 468 took effect, there is a legal argument for the exemption to apply to your transaction even if delivery is later. This depends on how the fiscal clause of the promise is worded and, ultimately, on the DGI's view of the taxable event. Consult a tax attorney before assuming it applies.

Pre-construction projects launched before the law

Some developers had their list prices calculated assuming the exemption. After the law, several opted to absorb the ITBI into the advertised price so they would not lose competitiveness against the resale market. If you are buying pre-construction, ask explicitly: "does the price include the ITBI or does the buyer pay it?". The answer changes the total cost by 1.5% to 2%.

New purchases signed in 2026

In projects launched in 2026, the ITBI is built into the initial quote. There is no ambiguity here: it forms part of the buyer's closing costs. Negotiation should focus on other items (list price, payment plan, upgrades, extra parking, deposit) rather than on the ITBI itself.

Updated Total Closing Costs for 2026

With the ITBI now active on first sales, typical closing costs on a new home in Panama in 2026 look like this:

Before Law 468, the range was 1.5%-3.5% for new housing. Today you have to add a full two percentage points to every first sale.

For investors and buyers with a fixed budget, this increase can push the decision toward three alternatives: lower the target price of the property, postpone the purchase until more capital is available, or pivot to resale properties where the ITBI was already present and therefore already priced into historical values.

Does Resale Make More Sense Now?

One interesting consequence of Law 468 is that it narrows the total-cost gap between new and resale housing. Previously, a new home had two fiscal advantages over a resale: ITBI exemption at purchase and annual property tax exemption. Today only the second remains.

This reopens the conversation about when each option makes sense.

New housing makes sense if:

• You value the developer warranty and lower maintenance costs in the early years.
• You want to access the annual property tax exemption (5-20 years depending on improvement value).
• You need financing under the Preferential Interest Law (some tiers require new housing).
• You plan to live in it and are not sensitive to two extra points of closing cost.

Resale makes sense if:

• You are looking for a tighter market price: resales typically have negotiable spread.
• The specific location you want is only available on the secondary market.
• You want to close faster (no project delivery wait).
• The building has operating history you can audit before buying (HOA fees, reserve fund, occupancy). This is covered in HOA Fees.

To evaluate the real total cost of any option — new or used — in zones like Obarrio, El Cangrejo or Bella Vista, the PanamaEstimate tool projects price, closing costs, monthly payment and ROI on real market data.

Mistakes to Avoid After Law 468

1. Not subtracting the ITBI from your budget. If you started searching with $300,000 of total capital, your real ceiling for the property price today is $290,000 once ITBI and fees are subtracted. Calculate the right ceiling before you start visiting projects.

2. Assuming the developer absorbs the tax. Some do; many do not. Always ask in writing what the quoted price includes.

3. Under-declaring the price in the deed to reduce ITBI. The ITBI is calculated on the greater of price or cadastral value, and the DGI cross-references with bank appraisals and project blueprints. Under-declaring is inefficient and creates future problems: the buyer ends up with a low cost basis and that increases capital gains tax when they go to sell.

4. Forgetting the ITBI when calculating ROI. If you buy as an investment, add the 2% to the acquisition cost before calculating yield. A unit that looked like it returned 6% on a clean price may return 5.4% once the ITBI is included.

5. Not reviewing the promise contract. In pre-construction projects signed after April 2025, the contract must specify who assumes the ITBI. If the clause is ambiguous, assume it falls on you.

What to Do if Your Purchase Is in Progress

If you are in the middle of buying a new home right now:

Case A — promise signed before April 25, 2025 with pending closing: consult your attorney about whether any acquired-rights argument applies. The Panamanian Supreme Court tends to respect consolidated rights when the promise predates the legal change, but the standard is applied case by case.

Case B — promise signed in 2025 after April 25: the ITBI applies without dispute. Negotiate with the developer for total or partial absorption of the tax as part of the commercial concessions.

Case C — buying into a pre-construction project launched in 2026: the ITBI is already priced into your financial plan. Make sure the contract reflects it explicitly.

Case D — buying resale: no change. The ITBI always applied to resales and remains the same.

The August 2026 Counter-Reform: the Bill That Would Revive the Exemption

The next chapter of this story opened on August 13, 2026: Economy and Finance Minister Felipe Chapman presented to the National Assembly a bill that would amend Law 106 of 1974 and Law 4 of 1994 to partially restore the ITBI exemption on the first sale of new homes. The initiative was previously approved by the Cabinet Council (July 30, 2026), is co-sponsored by the Ministry of Housing, and has the public backing of construction industry groups, including CAPAC.

What the bill proposes

• Full exemption from ITBI on the first B/.120,000 of a new home's value on its first sale.
• Reduced rates on the excess for homes up to B/.200,000, based on total value: 0.5% if the home is worth up to B/.130,000; 1.0% up to B/.150,000; 1.4% up to B/.170,000; 1.6% up to B/.190,000; and 1.8% up to B/.200,000.
• No benefit above B/.200,000: those transactions would continue paying the full 2%.
• First sale of new homes only, which must be formalized within 2 years of the occupancy permit being issued.
• The seller bears the ITBI: the bill declares void any agreement shifting that obligation to the buyer.

What it means while under discussion

The bill must go through legislative debate and the Assembly may amend it before final approval. Until that happens and the law is published in the Official Gazette, the rule in force is the one in this guide: 2% on every first sale. If you are about to close on a new home of B/.200,000 or less, it is worth asking your attorney about the bill's status before signing — the outcome and timing are not guaranteed, and whether to wait or close depends on each case.

If the bill passes, this guide will be updated with the final rules and their effective dates.

Sources: bill presented to the National Assembly (August 13, 2026); Cabinet Council approval (July 30, 2026); coverage by Infobae, La Prensa, Panama America and TVN, July-August 2026.

Conclusion

Law 468 changed the math of buying a new home in Panama. After half a century of ITBI exemption on first sales, beginning in 2026 every property purchase pays 2% on the greater of price or cadastral value. On a $300,000 home that is $6,000 of additional cost that simply did not exist before.

What the change does NOT touch are the other incentives that sustain Panama's appeal: the annual property tax exemption on new housing (5-20 years), the dollarization, the territorial tax regime, competitive mortgage financing and the special heritage regimes. Panama remains one of the most fiscally efficient real estate markets in Latin America. You just need to update the cost spreadsheet and walk into negotiations with the right numbers.

And watch the next chapter: the bill presented in August 2026 could bring back the exemption for new homes up to B/.200,000. If it passes, this guide will be updated with the new rules.

If you are evaluating a specific purchase and want a realistic total-cost calculation — including ITBI, fees, HOA and projected annual taxes over 5-10 years — the first step is to model it with the data of the specific building and chosen zone.

Related articles on PanamaProp:

• Taxes When Buying a Property in Panama 2026
• Property Tax and Fiscal Exemption 2026
• Preferential Interest Law Panama 2026
• Hidden Costs of Buying Property in Panama
• How to Sell an Apartment in Panama 2026
• New Apartments Panama Pre-construction 2026

Want us to calculate the real total cost of a new home in 2026? At PanamaProp we build projections with updated ITBI, closing costs and HOA/tax forecasts per building. Ask Alma and we will review your case.