After much discussion and lengthy delays, LAW 21, 2008 went into effect April 15, 2008 and it extends the property tax exemption on new residential and commercial properties until December 30, 2011.
The old law on the exemption had expired on August 31, 2007 and left developers of both residential and commercial properties unable to offer the exemption from property taxes to potential buyers.
The property tax exemption is not automatic.
If a buyer is considering buying in a multi-unit residence, such as a condominium, the developer should file on behalf of all the units and the individual buyer should not have to worry about filing him/herself. The same applies for developers of single-family dwellings and duplexes. However, caveat emptor!! Have your attorney confirm the status of the exemption.
If you are building yourself, you will have to file. The office of the Direccion General de Ingresos (DGI) can provide the necessary forms for application for the exemption. The completed forms must be accompanied by the public deed, a copy of the building permit and the occupancy permit.
The law specifies two very important dates in order to qualify:
- July 1, 2009 - INITIATION. The building permit must be obtained before this date.
- December 30, 2011 - COMPLETION. The occupancy permit or the improvements must be filed by Public Deed with the Public Registry by this date.
Failure to meet these dates may result in a reduced tax exemption...or worse.
If you are buying raw land and intend to build on it yourself, remember the building boom occurring in Panama; it has created a demand on resources.
Consider the often-lengthy escrow time to buy the land, the hiring of a design firm, the building permit process, interviewing and hiring a builder or contractor, obtaining workmen and construction materials, the occupancy permit process and the inscription registration.
Two years is not an unreasonable time to expect to accomplish your project. Leave yourself plenty of time.
As always, you are encouraged to use a reliable real estate attorney to help guide and to provide counsel.
No one likes more paperwork. But, with a little diligence, the Panama tax exemption provides a marvelous opportunity to save significant money!!!
See our website to find our more about the many quality services we offer at:
www.panamarealestatesolutions.com.
