New Property Tax Law in Panama

October 7, 2009

A new tax law has been recently approved and it has been put in force. Many changes have been made to the tax law that still need to be reviewed, but here we list the most important ones concerning real estate properties.

The main changes are the following:

  1. Capital Gains Taxes: In the past, the capital gains tax was 10% of the gain. Now it is either 10% of the gain, or 3% of the sale value. The transfer tax of 2% remains in effect also.
  2. Property Taxes for Apartments: In the past, the first $30,000 of the LAND VALUE (not the improvements value) that applied to apartments in Horizontal Property (apartment buildings) was exonerated for all apartments regardless of their value. Now, for apartments with values of over $80,000 (this is the maximum value of social interest properties), they will pay a progressive combined property tax on the land value as follows: 1.4% of the first $20,000, plus 1.75% from $20,000 to $50,000, plus 1.95% from $50,000 to $75,000, plus 2.1% from $75,000 and up.
  3. Property Taxes for Land & Houses (not Apartments): The new progressive combined property tax for land and improvements (together) is as follows: 1.75% from $30,000 to $50,000, plus 1.95% from $50,000 to $75,000, plus 2.1% from $75,000 and up. The first $30,000 continues to be exonerated from property tax.