Panama Extends Real Estate Tax Exemption

I often promote Panama as one of the most "foreign friendly" nations in the world -- because it is.

In addition to special investment and business visas available by law, the popular pensinado program allows qualified foreigners to acquire quick residence permits, move in and enjoy tax breaks and discounts on goods, services and imports of household furnishings, autos and boats.

But there are also real estate tax breaks worth tens of thousands of dollars to ex-pats who retire in this peaceful haven or who buy second homes here. Investors have rushed in too and high-rise condos, hotels and shopping centers have sprung up like tropical flowers, with the Panama City skyline a forest of construction cranes and new skyscrapers.

Indeed, these unique incentives have brought in thousands of foreign residents, spurred a national economic boom and created many needed jobs. (Meanwhile, the multi-billion dollar expansion of the Panama Canal is already underway).

Future Prosperity

Nay sayers have talked a lot about the "real estate bubble" being about to burst -- but reports this week confirm that Panama's current prosperity will continue.

Panama now has Latin America's highest economic growth, (Mexico has the lowest), according to new data from the International Monetary Fund (IMF). Panama will see GDP growth of 7.7% this year and 7.2% next. That's the highest rate in Latin America and follows Panama's 2007 phenomenal growth of 11.2%, one of the world's highest, the best in the region and the best GDP growth in Panama's recent history, according to IMF data for the past 27 years.

Quick Action Needed

But you need to act soon to benefit from the much coveted Panama real estate tax exemption law. Imagine buying or building a new home anywhere in the United States (or any country) and being given a real estate tax exemption on your new property for 20 years!

Under Panamanian laws in the recent past, a foreign resident who built a new house or condo paid no real property taxes for up to 20 years. This exemption has been extended several times and did expire, but the Torrijos government and the Legislative Assembly just adopted a new extension. Although there has been lots of talk and uncertainty, yesterday the exemption law became official when published in the Official Gazette (Gaceta Oficial).

Under the terms of the extension law foreigners who build new construction have until July 1, 2009 to obtain a building permit, and to December 31, 2011 to acquire the occupancy permit. One source in Panama suggests that anyone wishing to take advantage of this 20-year tax exemption needs to act within the next 8-10 months in order to get everything done in time. For more information, see http://primapanama.blogs.com/_panama_residential_devel/2008/04/you-have-about.html

When purchasing an already existing building in Panama, a foreign buyer may be eligible for tax exemptions that were applied in the past to the property. If you are buying relatively new construction property, check to see if it is tax exempt under a prior owner or builder’s original exemption, since the tax exemption travels with the land to new owners, even though the number of remaining years may have been reduced.

Mucho Mas!

We will explain this tax exemption and much more (mucho mas!) at the Sovereign Society's 20th Annual Total Wealth Symposium, May 14th-17th at the Sheraton Panama Hotel & Convention Center, Panama City, Panama. Speakers will tell you everything you need to know in order to obtain residence, not only in Panama, but in other tax havens where you might wish to make a second home. I invite you to join us and I hope to see you in Panama.

PS: Reserve your seat right now for our 20th Total Wealth Symposium, and you can receive a special discount. Click here for details.