Taxes on Property in Panama
The Tax on Real Estate in Panama is applied to the value of the land and all improvements registered, which are not exempt. Here is a list of real estate tax rates in Panama:
Tax Rates of Real Estate in Panama (Property Tax):
- The first $ 30,000 USD is exempt.
- Between $ 30,000 and $ 50,000 have a rate of 1.75%.
- Between $ 50,000 and $ 75,000 have a rate of 1.95%;
- All over $ 75,000 has a rate of 2.1%.
- Progressive Alternative Tax Rate for Real Estate in Panama
There is another “progressive alternative” real estate tax in Panama which applies to existing properties in peace and security where the taxpayer presents a sworn statement of a new value based on a certified appraisal company.
Properties in Panama with occupancy permits issued before July 1, 2012 will be levied with this rate as long as the improvements have been presented to the Public Registry before July 1, 2011.
New buildings with building permits issued after July 1, 2010 with improvements registered within one year after the issuance of the occupancy permit qualify for this rate. Additionally, the value of the land must be updated if it has been more than 5 years since the improvements were registered.
This rate is from 0% up to $ 30,000 for the value of the land and improvements;
0.75% between $ 30,000 up to $ 100,000;
From $ 100,000 onwards the rate is 1%.
The parcels of land where the condominiums remain constituted as “horizontal properties” with the proportional value of the owner of a condominium on the property not exceeding $ 30,000 will be at a rate of 0%. Otherwise the property will be taxed at a rate of 1%.
Property Transfer Tax in Panama
The transfer of real property in Panama is 2% of the greater between the total value of the sale or the registered value plus the value of the improvements plus 5% for each year since the property was obtained and the sale.
20 Year Property Tax Exemption
Any newly constructed residential building will be exempt from paying property taxes for 20 years from the date of the occupancy permit. This exemption only applies to improvements and not to the land. Since the exemption applies to the property and not to the owner, the remaining years will continue with the property after it is sold. If the land is worth more than $ 30,000 USD then the property tax will apply.
Note: If the developer of the property failed to apply for the 20 year exemption or if you purchased a newly built house from an advertiser who did not apply for the exemption you must do it on your own. Go to the Department of Exonerations at the Ministry of Economy with a copy of your public deed and apply for tax exemption.