Taxes · Guides · 6 min read
Property taxes in Panama: what an owner pays (and what they don't)
A guide to Panama's property tax: progressive rates, the primary-residence exemption up to $120,000, the 2% transfer tax, and the 10% capital gains tax.
Updated: July 18, 2026
Short answer
In Panama, a primary residence is exempt from property tax on the first $120,000 of registered value; the excess is taxed progressively (0.5% up to $700,000 and 0.7% above). On sale, the seller pays a 2% transfer tax and 10% capital gains tax, collected via a creditable 3% advance withholding. Brackets current as of July 2026.
One of the reasons Panama attracts international real estate investment is its moderate, predictable tax burden. Here's the full picture of the taxes that touch a property — when you buy it, while you hold it, and when you sell it. (Informational guide: confirm your specific case with a Panamanian accountant or tax attorney.)
While you own it: the property tax (DGI)
The annual real estate tax is calculated on the registered (cadastral) value using progressive rates. The key is the Family Wealth / Primary Residence regime: if the property is your primary residence, the first $120,000 of value is exempt and the excess pays reduced rates (0.5% up to $700,000 and 0.7% above that). For second homes and investments, the base exemption is $30,000 and rates run from 0.6% to 1.0%.
In addition, many new projects enjoy multi-year improvement exemptions (depending on the construction permit date and value), which significantly reduces the tax during the first years. When buying pre-construction or in a new project, always ask how many exemption years remain — it's part of the value.
When you buy: the transfer tax
Transferring real estate pays 2% on the greater of the sale price and the updated cadastral value. By market custom in Panama the seller assumes it, but it's negotiable in the contract.
When you sell: capital gains
The gain on a property sale is taxed at 10%. In practice, the buyer withholds 3% of the total price as an advance on that tax; if the 3% withheld exceeds 10% of the actual gain, the seller can request a refund of the difference or treat it as the final tax.
What about rental income?
Panama-source rental income is taxable in Panama (with deductions for expenses like maintenance, management, and mortgage interest). Panama has a territorial system: as a non-resident, you're taxed here only on income generated here. Your country of residence may have additional rules — coordinate with your tax advisor.
Summary for the investor
- —Holding: progressive property tax, with meaningful exemptions (primary residence and new projects).
- —Buying: 2% transfer tax (usually paid by the seller) + closing costs.
- —Selling: 10% on the gain, with 3% of the price withheld.
- —Renting: taxable in Panama with deductions; territorial system.
Evaluating a purchase? We'll walk you through the real numbers
Talk to an advisorFrequently asked questions
- How much is property tax in Panama?
- Panama property tax is progressive. For a primary residence (Tributary Family Patrimony), the first $120,000 of registered value is exempt, then 0.5% applies from $120,001 to $700,000 and 0.7% above that. Secondary, commercial, and investment properties get a $30,000 exemption and rates of roughly 0.6% to 0.8%.
- Do foreigners pay higher property taxes in Panama?
- No. In Panama the annual property tax, the 2% transfer tax, and the 10% capital gains tax are the same regardless of nationality or residency status. A foreign buyer holds title and is taxed on the same terms as a Panamanian; only your immigration process differs, not the tax.
- What taxes do I pay when I sell property in Panama?
- When you sell in Panama, the seller pays a 2% transfer tax on the higher of the cadastral value or sale price, plus 10% capital gains tax on the profit. In practice a 3% advance is withheld on the sale price; if 10% of your actual gain is lower, you can apply for a refund of the difference.
- How do I get the $120,000 primary-residence exemption in Panama?
- To claim the exemption on the first $120,000, you register the property as Tributary Family Patrimony (primary residence) with the DGI, submitting your ID or passport, the title certification, and a notarized sworn declaration. The DGI has up to three months to approve the filing.
