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Panama Real Estate Taxes
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Just a few years ago, villa, penthouse, apartment or condominiums in Panama have cost a lot of money. Today, however, the real estate in Panama dropped in price and local realtors have much more affordable deals. For the price of $100,000 today you can buy real estate in Panama of 80 square meters. Cost of penthouses and villas in Panama were also dropped, so today everyone has the opportunity to take advantage of enticing offers and buy property in the country that represents a pure democracy.

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Panama Real Estate Articles: Panama Real Estate Taxes
Real Estate Transfer Tax
Transfer tax must be paid by seller at the moment of transfer of the property.

A 2% real estate 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, which ever 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 oficial property value, increased by 5% per year of tenancy, or (2) to pay income tax at a 10% rate based upon the assessment value plus a 10% increase for each year of tenancy. If the taxpayer chooses this second option, no further taxes on capital gains on the transaction are levied.
Sale of a new residential property is exempt from this tax if the buyer uses it as a personal residency.

The real estate transfer tax can be offset as a direct credit against the income tax levied on a capital gain arising from the sale, if any.

Income on capital gains resulting from the sale of real estate is taxed in full and on a separate basis regardless of whether the company or the individual had a net taxable income or a net operating loss.

Real Estate or Property Tax

All land and real estate improvements thereon located in Panama 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.

The maximum annual percentage of assessment is 2.10% which is based upon two items: (a) over the value of the land, and (b) over the declared value of the improvements built.

The taxable base will depend upon the total value of the land plus all improvements. Real estate transactions at prices of more than the appraisal value will automatically increase the value of said properties for tax purposes. Certain properties and improvements thereon are exempt or can obtain exemptions from real estate taxes according to special incentive tax laws.

Real Estate Properties with assessed official values of less than US$30,000.00 are exempt from taxes. Real estate taxes have priority over all encumbrances on the property.

Taxes can be paid in three installments, namely by April 30th, August 31st, and December 31st.

A tax clearance certificate must be obtained before any real estate transaction can be completed and will be required by the Panamanian Public Registry Office for any transaction regarding the property.

Business Panama Real Estate is one of the largest full services groups in Panama with experienced real estate brokers, lawyers, bankers, title insurance experts and other professionals to assist clients on any business they need.

At Business Panama Real Estate, we can help you with:

Buying a property or home in Panama City, Beaches, Islands or Mountains
Forming a company to own your property
Legal services to purchase the property
Applying for your residence program
Title insurance
Home owners insurance
Bank mortgage financing
Others

We provide you a "One Stop Solution" for all your real estate services in Panama from any of our offices in Panama City, Azuero or David.

For more information, please contact us.
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