Panama Real Estate Taxes
Real Estate Sale Transfer Tax
Sale transfer tax must be paid by seller before finalizing the sale transaction.
A 2% real estate sale transfer tax is levied on the transfer of real estate based either upon (1) the sale price stated in the official purchase/sale document (sale contract), or (2) upon the official property value, whichever is higher.
The taxpayer may choose to pay either (1) the 2% real estate transfer tax over the greater of the purchase price of the property or the official cadastral property value, which is slightly increased per year of tenancy.
Capital Gain on a Real Estate Sale Transaction
In addition, to the real estate transfer, a capital gain tax (if any) must be paid to the tax office.
The capital gain tax can be calculated in 3 options:
Option 1 – 10%
This option consists in taking the sale price of the property, less the cadastral property value and expenses related to sale transaction. This amount will be
considered the net taxable amount which the rate of 10% will be applied, or
Option 2 – 3%
This is a straightforward calculation, which will be calculated using the same method as the sale transfer tax, by taking over the greater of the sale price of the property or the official cadastral property value (whichever is higher). If taxpayer choose this option, the paid amount will be considered as final,
Option 3 – 0.00
If the property sale transaction does not generate any income, then the seller
must not pay any capital gain, however, regardless of this, the capital tax forms must be filled and submitted to the tax office as well.
Real Estate or Property Tax
All land and real estate improvements thereon are subject to real estate taxes. Real Estate tax is appraised by an agency of the Ministry of Economics and
Finance. It must be paid according to the official assessment value, which is usually the declared value on the sale document. Nevertheless a few years ago,
the government of Panama enacted a law that really decreased the calculation basis for this tax in several options and just requiring a simple legal process.
Property Taxes in Panama
As of January 2019, properties can be registered under two categories which are:
Primary property or Family Patrimony
| N° | Property Value
| Tax |
|---|---|---|
1 | US$ 0 to US$ 120,000.00 | 0.00 |
2 | US$ 120,000.01 to US$ 250,000.00 | 0.5% |
3 | US$ 250,000.01 and above | 0.7% |
And,
Secondary Properties, Commercial or Industrial
The tax properties applicable in this case will be as follow:
N° | Property Value | Tax |
|---|---|---|
1 | US$ 0 to US$ 30,000.00 | 0.00 |
2 | US$ 30,000.01 to US$ 250,000.00 | 0.6% |
3 | US$ 250,000.01 to US$ | 0.8% |
4 | US$ 500,000.01 and above | 1.0% |