One of the most notorious signs that indicates that we have reached adulthood is that we want to have our own space which we can call “home sweet home”. It is a very beautiful stage and one desired by all of us, but it is still a responsibility. In order to reach that result, we are going to need to comply with certain steps…. and believe me, there is no one more knowledgeable about these steps than a real estate broker.
I would like to relate a life experience in order to be able to make my point understood instead of giving a technical explanation of the steps that must be followed. I don’t want to give my client’s name for obvious reasons, so we’ll call him Manuel José.
Manuel José lives rented with his family in an apartment, however he has been saving and trying to see how he can make his dream come true. He contacted me, so I asked him for a formal interview in my office. Just like a doctor needs the patient to come to his office to prescribe medicines and treatment? Well, we brokers need our clients to come in order to get as much information as possible and thus detail a plan to follow (it can be a video call or in person. Also, this denotes that the client indeed is committed to receive some advice and take it seriously).
Manuel José is a 21-year-old certified translator; he declares income as a natural person, however, he does not comply with the minimum revenue declarations that banks ask for currently (x3 in most of the big banks in Panama), no money for down payment and something very common: he does not know how and where to start. Although this would discourage anyone, I encouraged him to get ready and make an action plan with simple steps. A plan can take time to be carried out, but it is so important to achieve the dream that one wants to fulfill, as well as for the personal growth of each one of us. In short, not only did I focus on telling him that he should have a third income statement (which he needed and that he should increase his income), but also that I told him that there are tax exemptions that many times people do not use due to ignorance or not knowing about them. In this way he would be able to save 15% of the net taxable income for two years that he must pay to the government for being a natural person.
The way to enjoy this exemption is by registering with the Panama Micro, Small and Medium Enterprise Authority2 (AMPYME in Spanish). You will ask yourself: what is it for? The objective of this exemption is to lighten the tax payment burden and thus ensure that micro and small entrepreneurs can allocate their money to personal and/or business growth. Upon registration, one may enjoy exemptions from paying natural and/or legal income for a period of two years. And how it works? At the end of each fiscal year, natural persons have until the last day of March to make our declarations through a Certified Public Accountant (for legal persons, they have until the end of June). At the time that your CPA makes the presentation of our declaration, he/she must attach a document issued by AMPYME2 which shows that one is registered with them and thereon you can enjoy this incentive for the aforementioned term of time. But this was not all…. In addition to this, I informed him that there are pros and cons when financing a property. If it is new property, and depending on the amount, the government encourages the purchase of new properties through preferential interest (from 4% less than the mortgage reference rate1) and financing up to 98% of the purchase value. On the other hand, if you want to buy a second-hand property, you are more likely to be able to get a bargain, however, you will have to repay the loan at the mortgage reference rate1 (currently at 5.75% + 1% FECI. This information is obtained on the website of the Superintendency of Banks of Panama1). Now after commenting on this, all depending on which idea is the best for his fit, I structured him a savings plan and encouraged him to contact his bank of choice as soon as possible and create a closer relationship with his officer. Also, I suggested him to increase his sum insured in his life policy since young people should always take advantage of their age. I told him that once he managed to do all the above, that he contacted me again to help him locate his home.
As you can see, a good broker has the tools at hand to not only see the specific scenario but also «get on the balcony and see it from a broad perspective». At the end of the meeting, my client was able to have a plan that would allow him to be work-oriented and to research, and most importantly, with the hope that, by complying with the written plan, he will be able to achieve his objective.
I have always liked to refer to the fact that a good real estate broker must be multifaceted, i.e., from being a secretary, therapist, psychologist, salesperson, to being a counselor. At the end of the day, we are humans dealing with other human beings. There is nothing more important than building trust and being upright.
Important note: national and foreign people can enjoy these exemptions. They are subject to comply with the specific requirements of each private and/or public bank.
Reference:
- Superintendence of Banks of Panama (https://www.superbancos.gob.pa/es/fin-y-est/reportes-estadisticos, then go to «Reference rate of the local mortgage market» and click on the Excel logo)
- Panama Micro, Small and Medium Enterprise Authority (https://ampyme.gob.pa/?page_id=144)
