Panama Property Taxes

Like every country in the world, properties in Panama are subject to taxes. After reading this article you will have a comprehensive and quick overview of Panama property taxes. Specifically, we will be talking about:

1. Property Tax Rates
2. Property Tax Exemptions
3. Paying Property Taxes
4. Property Tax Obligations for Foreigners
5. Capital Gains Tax on Property Sales
6. Additional Costs Related to Property

Panama offers favorable property tax rates compared to many countries. The rates depend on the value of the property and are structured as follows:

• Exemptions: Properties valued under $120,000 are tax-exempt if they serve as a primary residence and have been properly registered as such.

• Rates for Residential Properties (that are not primary residences or are valued higher):

-Up to $30,000: Exempt

-$30,001 to $250,000: 0.6%

-$250,001 to $500,000: 0.8%

-Over $500,000: 1%

Commercial and Non-Exempt Properties follow similar progressive tax.

In other words, if the property is not registered as primary residence and/or the cost exceeds $120,000, rates start at 0.6% and go up to 1%, depending on the value brackets indicated above.

There are several exemptions and incentives, particularly for newly constructed properties:

• Properties built before December 31, 2012 can have a tax exemption for up to 20 years

• Properties built after 2012 typically qualify for exemptions ranging from 5 to 15 years, depending on the value and intended use

• Properties used for farming or valued under $120,000 may also qualify for certain exemptions

Paying property taxes is done as follows:

• Property taxes are paid annually

• Payments can be made at banks or through Panama’s DGI (Dirección General de Ingresos) online portal

It is important to notice that discounts may apply for early payments.

As far as property tax obligations for foreigners, it is important to know the following:

• Foreigners are subject to the same tax rules as locals

• Owning property in Panama does not automatically confer residency but can support visa applications like the Friendly Nations Visa or the Retirement Pensionado Visa

When looking at capital gains tax on property sales, that is, when selling property in Panama, a 10% capital gains tax typically applies based on the sale profit.

Additional costs related to property apply when:

• Transferring a property, which is a 2% tax on the greater of the sale price or the registered value of the property

Additionally, some local municipalities may apply small additional taxes based on location.