About Panama Property Taxes
Panama property taxes are calculated considering the value of land, construction, and improvements to the property. Property taxes apply to all types of properties, whether single-family, multi-family, residential, condominium, commercial, or agricultural. Likewise, the tax also applies to the declared value of vacant residential, commercial, or agricultural land.
In October 2018, President Varela made the most extensive reform to Panama’s property tax laws in the last 40 years. This new law came into effect on January 1st, 2019, and modified the property tax rate throughout the country. These changes had the objective of generating savings to owners, whether Panamanian or foreign citizens.
Properties Declared as Tributary Family Patrimony or Primary Residence
Panamanian law defines Tributary Family Patrimony or Primary Residence as the immovable property intended for housing purposes by the owner and his family. Owners can declare only one property as Tributary Family Patrimony or Primary Residence based on their circumstances. Once declared, the owner can have this new property tax scheme applied.
In Panamanian laws, a property owner is defined as a person who possesses an immovable property with title registered under his name, along with a spouse, along with up to two more relatives, or registered in a legal entity (e.g., an IBC) where the beneficiaries of that entity belong to the same family group.
This definition of an owner makes no distinction by age or type of legal entity. Therefore, retirees and pensioners can also declare Panamanian Property as Tributary Family Patrimony. It is also possible to declare Tributary Family Patrimony within trust accounts.
Thus, as of January 2019, the properties declared as Tributary Family Patrimony or Primary Residence must pay property taxes following this scale according to their declared value in the Panama Public Registry:
- Between $ 0 and $ 120,000 = exonerated.
- Between $ 120,001 and $ 700,000 = 0.5% of the value.
- At more than $ 700,000 = 0.7% of the value.
Other Properties, including Commercial or Industrial
On the other hand, secondary residences (not declared as Tributary Family Patrimony), commercial properties and industrial properties must pay property taxes following this scale according to their declared value in the Panama Public Registry:
- Between $ 0 and $ 30,000 = exonerated.
- Between $ 30,001 and $ 250,000 = 0.6% of the value.
- Between $ 250,001 and $ 500,000 = 0.8% of the value.
- At more than $ 500,000 = 1.0% of the value.
Paying Panama Property Taxes
Panama property taxes can be paid directly at the offices of the Direccion General de Ingresos (DGI). In addition, banks, financial institutions, and other institutions that grant financing for the purchase of homes or real estate are, in general, authorized to withhold property taxes in Panama.
On the other hand, the property tax will be collected by the financial institution, and not the DGI, when the property is not registered as Tributary Family Patrimony, and the property has a mortgage.
Panama property taxes are paid in 3 installments: April 30th, August 30th, and December 31st. Payments after each due date have a 10% surcharge. There is also a 10% discount if you pay the full yearly cost of property taxes before March 1st.
Contact Us to learn more about Panama Property Taxes.