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Property Taxes in Panama and the new property tax updates July 2013

Property Taxes in Panama and the new property tax updates July 2013

By in Blog with 2 Comments

Update on Property Taxes in Panama

We’ve already seen it happening in Punta Pacifica and Paitilla, with future plans to canvass the entire downtown Panama City corridor and then move into the interior.  The tax man cometh!  As the Martinelli administration continues to spend money on infrastructure projects, the government must continue looking for ways to fund these projects, and property tax increases are being enacted in many cases without the property owners ever being notified.

In other words, your tax rate may have been adjusted already, and there’s no way to dispute it if you dont act within a certain window of time.
The good news is, we’ve identified a legal loop-hole to either freeze the property values which those taxes are based on and/or dispute the new value, but the key is acting either before your property gets reassessed or within two weeks of the property appearing on the public notice of reassessment or “Lista de Revalorizacion Catastral.”

Regardless of whether your property is exempted from property taxes, when it comes time to sell, you will have to pay the transfer tax/capital gain tax lump sum of 5% based on the registered value of the property.  That said, many property owners are taking advantage of keeping an old, non-updated property value as a basis for their taxes.  For someone that owns in a building that’s more than 20 years old, their place may be worth $500,000, but if it’s registered at only $90,000, then they are paying taxes based on that old value.  This is important even for owners of properties that still have the property tax exoneration, in that when it comes time to sell or when the exoneration expires, they want to make sure that their tax basis is a low as possible.

Certain areas and certain buildings are being targeted for reassessments and the only way to know if your property’s been reassessed is to keep an eye on the local newspapers on a daily basis or hire a firm that will do that for you.

We’ve started working with a firm and that has an alert service set up to automatically notify property owners once their property appears on Catastro’s list.  They have also been able to help our jubilado clients FREEZE the value of their property to avoid any future tax increases, even if the property gets reassessed.

If you’re interested in working with them, please contact us!

About The Author

Kent Davis, founder and Managing Director at Panama Equity real estate, has been widely quoted in publications such as Wall Street Journal, Time Magazine, The Miami Herald and the Financial Times for his unabashed views on the Panama real estate market. Panama Equity is regarded as one of the most active real estate agencies in Panama and Kent’s articles, reports, and market research projects have been syndicated by press agencies including Bloomberg and the Associated Press.   Connect with the Author via: Email | LinkedIn | Facebook | Google+

2 Comments

  1. Carolina says:

    I’m a pensionado holder and one of the benefits I was told is that my status freezes my property value and any assessments. Has this changed.

    • Kent Davis says:

      Hi Carolina, thanks for writing. I need to check to see if that option is still available because I havent heard of many pensionados taking advantage of it since the Martinelli days. Will revert!

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