When buying real estate in Panama it is important to remember that it is a subject to certain taxes regardless of who acquires property – foreigner or resident.
Generally there are two types of ownership in Panama. The first called “Titled Property”, i.e. the real estate which is fully owned by the person who paid for it. The second type is “Property with Possession Rights”, i.e. state owned property, but in the possession of the person or entity on certain terms and conditionswith appropriate agreement. Obviously, onlythefirsttypeisasubjecttotaxation.
Current legislation allows a 20-year exemption on real estate taxes for all assets of the enterprise, but for this case the property must be registered in Public Registry before the 31st of December of 2012. Any property which for some reason wasn’t registered before that date gets tax exemption as it shown in this table:
| Property value | Tax exemption |
| 30.000 – 100.000 $ | 15 years |
| 100.000.01 – 250.000 $ | 10 years |
| 250.000.01 andabove | 5 years |
Non-residential property with value $30.000 and above is exempt of taxes by 10 years. Land valued above $30.000 cannot be exempt of any taxes.
Taxes are generally paid 3 times per year, i.e. each four months – in April, August and December. None of the tax benefits for individuals (for example, retired people) are a subject of extension to real estate deals.
The tax amount is calculated in fractions depending on the price according to this rule:
| Property value | Tax amount (% of the value per year) |
| Below $30.000 | 0 % |
| $30.000 – 50.000 | 1.75 % |
| $50.000 – 75.000 | 1.95 % |
| Above $75.000 | 2.1 % |
For example for the property valued in $ 200.000 the tax will be calculated as follows:
0% for $30.000 +
1.75% for additional $ 20.000 +
1.95% for $ 25.000 +
2.1% for $ 125.000
which all amounts to $ 3.462.50 per year.
Any property that is purposed to the development of tourism is also a subject of 20-year tax exemption. It can include any type of hotels, motels etc., as well as conference rooms, museums, parks, i.e. all the places that contribute to development of tourism.
Also it is important to mention that any type of tax benefits are tied to the property unit, not its owner, which man the right for any benefit can be easily transferred with sale.
