By Danny Bance

Panama tax code changes hoped to improve housing market

Panama is to make changes to its tax code in a bid to stimulate housing market activity. A new cabinet report revealed the government has given the OK to a bill that will amend the code that creates a tax incentive for real estate investment companies, Newsroom Panama reported. The minister of the economy and finance will now submit the changes to the National Assembly in a bid to address the way real estate investment is treated in the country.

Should the proposals be made law, the reforms will see Panama property be subject to a similar tax regime to that used in countries like the US, Spain and Costa Rica, the news provider explained. This will give all investors equal direct exposure to the housing market, offering good liquidity and transparency. A vehicle will be established to help buyers invest in property on a scale that normally would have been out of their reach. Simultaneously, according to Newsroom Panama, this will help to generate a new wave of alternatives for fundraising for real estate activities. Currently, investment largely relies on bank loans.

The changes to the tax code will be welcomed as Panama's economy continues to expand. Indeed, the country is on an upwards growth trajectory, making it an attractive spot for investors. The holiday-let sector is also set to become more robust as the government works to improve its tourism figures. Currently around 2.1 million tourists arrive in Panama and ten per cent growth in expected for the year. This is part of a larger trend and the country is improving its holiday infrastructure to cope with rising overseas demand. STR Global reported that since 1997 the number of hotel rooms in Panama City alone increased from 1,400 to more than 15,000.

Investing in property for let can give landlords access to yields as high as 8.4 per cent, according to the Global Property Guide. However, Reuters reported, that are still risks in the economy that buyers need to aware of over the long-term. Panama has felt the effects of the Colombian and Venezuelan dispute as a trading partner of both nations.
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