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Property Taxes in Panama

Property Taxes in Panama

By in Blog with 1 Comment

You may already know that in Panama the exoneration of the payment of property taxes for 20 years apply to those properties whose occupation permits were issued before December of 2011. It is important to realize that this property tax exoneration in Panama has now changed.

In Panama at the time of publishing this article, the amount of time that a (new) property enjoys an exoneration from property taxes depends on the value at which it is registered. Properties with registered values up to $120,000 are automatically granted 20 years of exoneration. The improvements whose registered value are between $120,000 and $300,000 will have 10 years of exoneration and those over $300,000 will have 5 years of exoneration from the payment of property taxes. Keep in mind that the land on which the improvements are built is not exonerated unless it is registered under $30,000. That means you will still have to pay taxes on the land from day one, regardless of if the physical property is exonerated. This tax is divided proportionally amongst all of the residents of the building, and it is generally under $500/year.

The property tax amount is calculated based on the highest registered value. The first $30,000 dollars is always exonerated and the balance is subject to a tax of between 1.75% and 2.1%.

When you acquire Panama property in a resale that already has a registered value which is exonerated, the difference between the price that you are buying and the first registered value will define the property tax amount that is NOT exonerated. If for example you are purchasing a property on the resale market (not through a developer/not brand new) for $300,000 and was originally registered at a value of $240,000, the seller will be liable for paying property taxes on the difference, or $60,000 from the day the new sale is registered. In other words in the example above, if you then turn around and sell the property one year later for $350,000 then you as the owner will be subject to a tax between the registered value of the property and the new sell price for the amount of time that you’ve owned the property. It is possible, however, to file an update on the new price paid so that such difference will also be exonerated for the remaining time of the exoneration (already registered with the property). This process takes about 6 months and involves legal expenses. You’ll want an attorney who specializes in this very specific type of registry update.

While we do not claim to be property tax experts, we have great attorneys who we work with that are always standing by to help us answer Panama property tax questions.

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+

1 Comment

  1. Terri says:

    Hello, hope you can help.
    I bought a house from developer. Value of land is $25,000, improvements are $44,000. But I paid $132,000.
    I have an exoneration for 20 years, and on the paperwork it states exemption is for the $44,000 of improvements.
    I understand I do not have to pay land tax because value is less tha $30,000. But do I have to pay annual taxes on the difference of 132,000 less 44,000.
    Please advise I don’t want a big scare when I go to sell. Thank you so much.

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