Property Taxes in Panama: Basic Guide 2024

A crucial aspect that every real estate buyer or investor must understand is the property tax system in Panama. In this article, we will break down the essential aspects of property taxes, helping you understand what are the basic obligations of your Panamanian property.

Panama has the particularity, at a general level, of offering very attractive tax benefits compared to other countries, in the case of real estate it is no exception. The primary focus of Panama taxes for real estate is based on annual rates, which also apply to exemptions, exemptions and reductions, depending on how the owner classifies this property, or depending on the year of construction.

Annual Real Estate Taxes in Panama: How much tax is paid on a property?

Property taxes in Panama, whether residential (single-family or multi-family) or commercial, are always calculated based on the value of the land and the construction and improvements of such property.

According to the DGI (Direccion General de Ingresos), the tax office in Panama. The annual tax calculation for properties at a general level is as follows:

Value up to 30,000: 0.00% Tax

Value from 30,001 to 250,000: 0.60% Tax

Value from 250,001 to 500,000: 0.80% Tax

Value from 500,001 onwards: 1.00% Tax

These values are the general taxes established by law for properties in Panama, however, there is an exemption for Family Tax Assets or Primary Home.

What is a Family Tax Asset or a Primary Home?

According to the law, the term Family Tax Assets (Patrimonio Familiar Tributario) is that property or real estate that is used and considered as assets by a family (spouse, spouse with minor children, a single father or mother with minor children).

The term “Primary Home” (Vivienda Principal) is that property where one or more people live together, without having to be a couple or a family, and who consider living there permanently.

Annual Taxes for Family Tax Assets or Primary Home

When a property is declared in the DGI office as a Primary Home or Family Tax Asset, it enjoys some exemptions, leaving the annual property tax calculation as follows:

Value up to 120,000: 0.00% Tax

Value from 120,001 to 700,000: 0.50% Tax

Value from 700,001 onwards: 0.70% Tax

It is important to note that only one property can be declared as Primary Home or Family Tax Asset. If you have 2 or more properties, these properties applies to the calculation of general taxes established by law.

How are real estate taxes paid in Panama?

Taxes can be paid either at the offices of the General Directorate of Revenue (Direccion General de Ingresos – DGI), or in the institution’s online system (DGI e-Tax 2.0). In some cases, payments can also be made through some banking entities within the country.

Generally, the real estate tax can be paid in 3 installments: one on April 30th, another on August 30th and another on December 31st. But if you plan to pay the entire annual amount in a single payment, you can enjoy a 10% tax discount when paid in full before March 1st.

What Taxes Are Paid When Selling a Property in Panama?

The mandatory taxes that must be paid during the sale of a property are 2 types: The first is the Real Estate Transfer Tax, which represents 2% of the value of the property, and the second is the Capital Gains Tax which represents 3% of the total value of the property, or if the seller prefers to, pay 10% of the difference between the purchase value and the sale value.

All information presented in this article is subject to change by law or by guidelines from the General Directorate of Revenue. It is important to always consult more information with a real estate agent to avoid fines, delays or errors when making tax payments.