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Panama Real Estate Taxes

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Panama Real Estate

Panama real property transfers involving persons considered to be in the business of selling and/or buying real estate are subject to the Panama capital gains tax. Such persons are considered real estate dealers who sell 10 or more properties within a year. Their Panama capital gains tax rate is 10% of the realized gain from the sale. Prior to the recording of the deed, the seller is required to pay the Panama tax office 3% of the larger amount between the sales price and the recorded property value as an advance of the Panama capital gains tax. Similar to the sale of shares, the seller can claim this payment was in excess of the actual Panama capital gains tax on the realized gain and receive a tax credit on the difference. This tax credit can be used to pay other taxes, be converted into cash by the tax office, or transferred to the 3rd parties.

Panama capital gains tax rate is 3.75% of the larger amount of the sales price or the registered value of the property.

Panama Real Estate Taxes

20 Year Property Tax Exoneration

All newly constructed residential buildings will be exempted from paying property taxes for 20 years from the date of the occupation permit. This exoneration only applies to the improvements and not the land. Since the exoneration applies to the property and not 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 property developer failed to file for the 20 year exoneration or if you purchase a newly constructed home from the seller who did not file for the exoneration you must do it yourself. Go to the Exonerations Department at the Ministry of Economy with a copy of your public deed and apply for the tax exoneration.

Panama Real Estate Taxes

Panama Real Property Tax applies to the value of the land and all registered improvements which are not exonerated.

Here is a list of the Panama real estate tax rates:

  • The first $30,000 USD is exempt.

  • Between $30,000 up to $50,000 have a rate of 1.75%.

  • Between $50,000 and $75,000 have a rate of 1.95%; and

  • Everything over $75,000 have a rate of 2.1%.

Alternative Progressive Rate

There is another alternative progressive rate which applies to existing properties in good standing where the taxpayer submits a sworn statement for a new value based on a certified appraisal company.

Properties with occupancy permits issued before July 1, 2012 shall be taxed at this rate as long as the improvements were filed at the Public Registry by July 1, 2011.

New construction 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 land value must be updated if it has been more than 5 years from the time the improvements were registered.

  • This rate is 0% up to $30,000 for the land and improvement value; and

  • 0.75% between $30,000 up to $100,000; and

  • From $100,000 on up the rate is 1%.

Plots of land where condominium buildings are incorporated as horizontal properties with a condo owner's proportionate value in the land not exceeding $30,000 will be at a 0% rate. Otherwise the land will be taxed at a 1% rate.

Panama Real Property Transfer Tax

Panama Real Property Transfer Tax is 2% of the greater of the total value of the sale or the registered value plus the value of the improvements plus 5% for each year since obtaining the property and the sale.



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