Summary.
The bill establishes a tax regime for preferential mortgage loans granted by public or private financial intermediaries authorized by the Superintendency of Banks of Panama (Superintendencia de Bancos de Panamá). It defines the mortgage lender and borrower, the interest and preferential rates, the purchase price, a new home, and a primary residence. It requires the sale and the loan to be registered with the Public Registry of Panama (Registro Público de Panamá). The price includes the land and improvements; the purchase of land without improvements is ineligible for preferential financing. The primary residence must be a new home permanently occupied by the borrower.
For loans granted from January 1, 2026, the financing must be used exclusively to purchase or build a new home in the Republic of Panama as a primary residence. The loan must be secured by a mortgage on that property, and its purchase price may not exceed 120,000 balboas (B/. 120,000.00). Panamanian citizens and foreigners with permanent residence in the Republic of Panama may receive the subsidy once. The bill excludes interim construction financing and improvements to homes that are not new. While the subsidy is in effect, the borrower may repay the loan early without charges or penalties imposed by the lender.
Loans that received the subsidy provided under Law 3 of May 20, 1985, as amended, retain their status as preferential mortgage loans for the duration of their subsidy without being subject to the new requirements of Art. 3. The rate offered by the financial institution serves as the basis for calculating the state subsidy. The bill caps the subsidy at 85% of the interest rate charged by the bank and requires the lower of the calculated percentage and the maximum rate for the applicable price bracket to be used.
The first bracket provides for a maximum subsidized rate of 4.0% for a nonrenewable period of 8 years for homes priced at up to B/. 50,000.00. The second sets a maximum rate of 3.5% for a nonrenewable period of 7 years for homes priced from B/. 50,000.01 to B/. 80,000.00. The third sets a maximum rate of 3.0% for a nonrenewable period of 6 years for homes priced from B/. 80,000.01 to B/. 120,000.00. The brackets are determined by the purchase price at the time of financing and apply to new homes nationwide.
Properties exceeding the maximum price, the splitting of financing for the same property to circumvent that limit, and people who have already received the subsidy are excluded. Properties used for commercial or recreational purposes and second homes are also excluded. Loans granted and registered before the new law takes effect retain the subsidy awarded for its applicable term but do not qualify for the new brackets.
Borrowers covered by the regime may not claim the mortgage deduction provided in paragraph (c) of Paragraph 1 of Article 697 of the Tax Code. Both they and financial intermediaries must identify the nature of the loan in their income tax returns and attach the corresponding certificates; intermediaries must state in those certificates whether the loan is preferential. The subsidy under the new brackets may be granted from the effective date, set for January 1, 2026. The bill replaces Law 3 of May 20, 1985, and repeals Article 4 of Law 106 of December 30, 1974. Its provisions concern the Superintendency of Banks of Panama, the Public Registry of Panama, the tax administration, financial intermediaries, the housing sector, and buyers of new homes.
What it proposes.
- Tax regime for preferential interest rates on mortgage loans for new homes.
- Eligibility requirements, calculation, and duration of the state subsidy.
- Exclusions and income tax return obligations associated with these loans.
Who it would affect.
- Public and private financial intermediaries authorized to grant mortgage loans.
- Individuals financing a new home as their primary residence.
- Recipients of mortgage subsidies granted under earlier regimes.
Key points.
- The regime covers loans from intermediaries authorized by the Superintendency of Banks of Panama for new homes intended as primary residences.Arts. 1-2
- New loans require a mortgage, a purchase price within the established limit, and a beneficiary who meets the residency conditions; the subsidy may be received only once.Art. 3
- While the subsidy is in effect, the borrower may repay the loan early without charges or penalties.Art. 3
- Loans subsidized under Law 3 of May 20, 1985, retain their preferential status for the duration of the subsidy without meeting the new requirements.Art. 4
- The subsidy is calculated based on the rate offered by the financial institution, subject to a maximum of 85% of the rate charged by the bank and the limits for each price bracket.Arts. 5-7
- The price brackets set maximum subsidized rates of 4.0%, 3.5%, and 3.0%, depending on the home price, for nonrenewable periods of 8, 7, and 6 years, respectively.Art. 7
- Excluded are homes exceeding the maximum price, financing split to circumvent that limit, previous beneficiaries, and properties used for commercial or recreational purposes or as second homes.Art. 8
- Borrowers may not claim the mortgage deduction specified in the Tax Code; borrowers and intermediaries must identify and certify the nature of the loan in their income tax returns.Art. 9