A good day for property buyers

For the hardcore property buyers, April 15th was a great day. Law 21, 2008 was passed on this day. The law exempts property tax on new constructions. This has been the law for the past twenty years and it was extended for another two years and this was made effective from the April 15th.

This was indeed a good day for the property buyers because the exemption of annual property tax will apply to both new residences and commercial properties.

There is a trick for complying with these short time spans. The clemency begins on the time of issue of the Occupancy Permit, or when the improvements will be registered by the public deed with the Public Registry office. This has to be completed by 30th of December 2011 because the registration with the Public Registry takes about a week to complete so submitting the required documents at least one week before the deadline is a good idea. The two most important deadlines will be to attain the permit for building before 1st of July 2009 and completing the project by acquiring the Occupancy Permit or illustrating improvements by Public Deed by 30th of December 2011.  Properties, which will be completed after the given deadline will be having special property tax exclusion based on various factors, which are described below.

Residential construction, which is priced up to $100,000, will be qualifying for a tax exemption which will last for fifteen years.. From price range $100,000 till $250,000 will qualify for an exemption which will last for ten years. Prices over $250,000, will be qualifying for an exemption for five years. Residential purpose improvements of properties, which include apartments, various condominiums, etc and various other types of properties, this does not include the office buildings.

Waiting to purchase a land for the construction of your own home would not be wise. Locating real estate in Panama is a hard job and escrow processes takes time and getting the title deed would also require some time. After getting the title deed the designing of the home is a big factor, which includes hiring an architect. After the design phase comes the time to select a contractor from the various reputable builders. In Panama, construction takes up a lot of time, mainly because of the current surge in real estate good labor, equipment and materials are in a high demand. After the home is made, the occupancy permit will also require time also. Experts are predicting that these processes can take almost thirty months.

Exemption from property tax will not be automatic, only application for exemption will entitle the owner to be excluded from being taxed. Developers usually apply for this exemption on behalf of the units and projects, so when a customer purchases a condo or a single unit home in a brand new building they need not be concerned about it. But to be exempted from this tax when  building your own house will require an application. The forms are to be collected from the DGI’s office (Direccion General de Ingresos). Some other required documents are, the occupancy permit, the building permit and public deed (escritura publica).

It would be really unfortunate to miss this opportunity and this gift from Panama should be enjoyed to its full extent while it lasts.