Panama Property Taxes & Closing Costs for Foreign Buyers

Panama property taxes: annual rates and exemptions

Panama charges an annual property tax (impuesto de inmuebles) on titled real estate, and your rate depends mainly on one thing: whether the property is registered as your primary residence. Foreigners pay exactly the same rates as Panamanians. There are no surcharges for non-residents and no tax breaks for them either.

The tax is levied on the registered value of the land and the buildings on it.^[1] It is capped at B/.50,000 a year (USD 50,000, since the US dollar is legal tender in Panama).^[2] The current system comes from Law 66 of 17 October 2017, regulated by Executive Decree 363 of 4 December 2018.^[3] The new rates have applied since 1 January 2019. Any summary that quotes rates of 1.75% to 2.1% is describing the old regime.

Rates for a primary residence and for other property

For a registered primary residence, the first USD 120,000 is exempt, 0.5% applies above that up to USD 700,000, and 0.7% applies above USD 700,000.^[1] Everything else pays on a second table: second homes, rental units, commercial property and lots. The first USD 30,000 is exempt, then 0.6% applies up to USD 250,000, 0.8% up to USD 500,000 and 1.0% above that. The rates are marginal: each applies only to the slice of value inside its band.

Figures as of October 2026, under Law 66 of 2017 as in force since 1 January 2019. Rates apply only to the portion of value within each band.

What you would actually pay

For most buyers, the difference between the two tables is a few hundred to a few thousand dollars a year. If you live in the property full time, registering it as your primary residence is almost always worth the paperwork.

Figures as of October 2026, before any new-construction exemption and before the 10% early-payment discount.

Registering your primary residence (PFT or VP)

The lower table is only available once you file a request with the DGI (Dirección General de Ingresos). It does not apply automatically when you buy. The law offers two categories. Patrimonio Familiar Tributario (PFT) covers a home the owner lives in permanently with family under the same roof. Vivienda Principal (VP) covers the permanent residence of an individual owner who does not qualify for PFT, such as a single person or a widow.^[4]

Only one residence per owner can get the exemption or the more favorable table.^[5] The benefit generally runs from the date of the request, not from the date you bought.^[3] File it right after closing. Waiting months means paying the higher table for those months.

• Retirees and pensioners can register their home. A Pensionado visa is not required for the tax benefit, but the home must genuinely be your permanent residence.
• A vacation home you use a few months a year generally does not qualify, and a false declaration can be revoked retroactively.
• Couples file with their IDs, marriage certificate, children's birth certificates where relevant, and the purchase deed. Single owners file with their ID and deed, plus the spouse's death certificate if widowed.
• A company or private interest foundation owned by one family can also register the home. The DGI then asks for corporate documents, proof that family members are the owners or beneficiaries, and a sworn declaration.
• The request can be filed online through the DGI's e-Tax 2.0 system or in person. The DGI generally decides within three months.
• Births, deaths, divorces, a change of domicile and a sale must be reported, and a sale ends the benefit for you.

Are new homes exempt from property tax?

Often yes, but only the building, and only for a fixed period counted from the permit date. Under Article 81 of the Fiscal Code, residential construction with a permit issued from 1 July 2009 is exempt for 15 years up to B/.100,000 of construction value, 10 years from B/.100,000 to B/.250,000, and 5 years above B/.250,000.^[6] Homes permitted before 1 July 2009 received 20 years, provided they were registered by 31 December 2011.^[6] The clock starts on the date the improvements were registered or the occupancy permit was issued, whichever came first.^[6]

Not every schedule in circulation matches this one. Law 28 of 2012 is widely applied as giving 20 years up to USD 120,000, 10 years up to USD 300,000 and 5 years above that for permits issued from 2012 through 2018. Law 66 is also read as giving a three-year exemption for a first home valued between USD 120,000 and USD 300,000. Which rule applies to a given unit depends on its permit date and how it was registered, and we confirm it from the Registry and DGI record before you sign.

Three practical points matter more than the bands:

• Land is not exempt. You still pay tax on the land value above the exempt threshold.
• The exemption belongs to the property. A resale buyer inherits only the years left, so a "tax-free" condo built in 2016 may have little exemption remaining.
• Registering an exempt new unit as your primary residence can end the construction exemption for that unit. Run both numbers before you file.

Paying the tax, and what happens if you don't

The tax is generally paid in three installments, due at the end of April, August and December. Paying the full year before 30 April, with no arrears, earns a 10% discount under Article 9 of Law 208 of 2021.^[7] Late installments carry a 10% surcharge. No bill arrives in the mail, so you check your balance through the DGI's online system using a NIT (online access credential) linked to the property.

If the property is mortgaged, the bank collects the tax with your payments, under Executive Decree 362 of 29 November 2018 as modified by Executive Decree 50 of 3 June 2019.^[4] The tax is always the owner's responsibility and cannot be passed to a tenant.

Unpaid tax stays attached to the property. The Public Registry will not register a sale unless the property is shown to be paid up with the tax authority.^[8] That is why your lawyer checks the seller's paz y salvo before any money moves. Land held only under Rights of Possession (ROP) is not taxed at all, but it carries other risks, explained in our guide to buying land in Panama and titled vs ROP land.

Panama property transfer tax (ITBI) and the 2026 new-home exemption

Panama's real estate transfer tax, the Impuesto de Transferencia de Bienes Inmuebles (ITBI), is 2% and is owed by the person transferring the property, which is the seller.^[9] The legal basis is Law 106 of 1974, as reformed by Law 31 of 1991, Law 6 of 2005 and Law 5 of 2006.^[9] The seller declares it on Form 106 and pays it with code 120, in the same calendar month as the declaration.^[9] The Public Registry requires proof of the 2% payment before it registers the sale.^[8]

How the 2% is calculated

The tax is charged on the higher of two figures: the price in the deed, or the property's updated cadastral value. The update adds 5% of the cadastral value for each full calendar year the seller has owned the property, or 10% a year for taxpayers under a legal stability regime.^[10]

Here is an example. A seller bought an apartment with a cadastral value of USD 200,000 and held it for eight full years. The updated value is USD 280,000. If the apartment now sells for USD 260,000, the 2% is charged on the higher USD 280,000, so the tax is USD 5,600 rather than USD 5,200.

First sale of a new home: Law 546 of 2026

The new-home exemption has changed three times in 18 months, so the date your deed is signed matters. Law 468 of 24 April 2025 was published in Official Gazette 30264-A.^[11] It removed Article 4 of Law 106 of 1974, the provision that exempted first sales of new homes.^[12] Law 468 was then suspended until 31 December 2025, and the old exemption was restored until that date for deeds registered by then.^[13][14]

From January 2026, first sales paid the full 2% on the entire base.^[15] Law 546 of 31 August 2026 was published in Official Gazette 30601-B and took effect on 1 September 2026.^[15] It exempts the first B/.120,000 of a new home's first sale and applies reduced, stepped rates up to B/.200,000.^[16] The DGI's Form 106 instructions now reference Law 546 rates alongside the 2% and 5% rates.^[17]

Figures as of October 2026. How the bands apply to homes priced above B/.200,000 is still being settled in practice, so we confirm the calculation for each transaction.

The conditions are narrow. It must be the first sale of a newly built home, generally formalized within two years of the occupancy permit, and a transitional rule allows up to 30 months.^[15] The seller declares eligibility under oath in the deed. The government presents the law as relief for a buyer's "first new home", but the text as published asks nothing of the buyer, and the test is the first sale of the dwelling.^[15] Sales formalized before 1 September 2026 paid the full 2%, and the law provides no refund.^[15]

This is the developer's tax, so why should you care? Because it shows up in the price, and because a developer may try to move it to you in the contract. Under Law 546, a clause shifting the ITBI to the buyer is generally treated as void. On a USD 180,000 new apartment, the ITBI drops from USD 3,600 to under USD 1,000, and that saving should be reflected in what you are asked to pay. If you are buying off-plan, our guide to buying a condo in Panama and the promesa de compraventa covers what the contract should say.

Panama capital gains tax on real estate

When an individual sells Panamanian property, the seller pays a 3% income tax advance on the higher of the sale price or the cadastral value. The seller can accept that 3% as the final tax, or be taxed at 10% of the actual gain, with the 3% credited. The gain is the sale price minus the property's basic cost and the necessary expenses of the sale.^[18]

3% or 10%: which one you end up paying

The two options cross at a simple point. If your gain is less than 30% of the sale price, 10% of the gain is lower than the 3% advance, and you can claim the difference. If your gain is more than 30% of the price, the 3% is the better deal and you simply keep it as final.

Figures as of October 2026. Assumes the sale price exceeds the cadastral value. Documented improvements and sale expenses reduce the gain further. The seller also pays the 2% ITBI.

The seller files Form 107, the sworn capital-gain declaration, through e-Tax 2.0 within the calendar month of the sale. The seller pays it with code 113 before the sale is registered at the Public Registry.^[19] The legal basis is Articles 701 and 701-A of the Fiscal Code and Article 2 of Law 33 of 30 June 2010.^[19]

Claiming back an overpaid advance is generally possible, but it is a separate, document-heavy process with the DGI and it is not fast. Keep your purchase deed and every receipt for improvements from day one. Without them, you cannot prove your cost.

Special cases

• Developers and habitual sellers: if selling property is part of the seller's ordinary business, the tax is a single definitive 3.75% on the higher of the sale price or the cadastral value.^[18]
• Small rural property: agricultural property and rural homes with a cadastral value up to B/.10,000 pay a definitive 3%.^[18]
• No home-sale exclusion: Panama generally has no primary-residence exemption from this tax.
• Your home country: Panama's tax is territorial, but if you are a US citizen or a tax resident elsewhere, that country may tax the same gain. See our guide to Panama taxes for expats.

Panama real estate closing costs: line-by-line breakdown

As a buyer, you should budget about 1-2% of the price for legal, notary and registry costs. Title insurance and escrow, if you use them, add roughly another 1-2%. The big taxes (2% ITBI and the 3% advance) are the seller's by default. The table below uses a typical case: a USD 300,000 resale apartment bought with cash. For the full purchase sequence, see our guide to buying property in Panama as a foreigner.

Figures as of October 2026. Public Registry fees are set by Resolution No. 212 of 18 April 2013 and are generally around 0.3% for a sale. A new home within its construction exemption may owe little or no property tax for some years.

What the seller pays

Sellers carry most of the cost of a Panamanian sale. The seller pays the 2% ITBI and the 3% advance, plus an agent's commission that is commonly around 5% (anywhere from 3% to 6%), their own lawyer, and any mortgage release. All in, sellers typically give up 7-12% of the price. That is why a seller will sometimes negotiate on price rather than on who pays which fee.

New construction vs resale

On a pre-construction purchase, the developer pays the ITBI (now reduced under Law 546) and its own income tax. The developer's standard promesa often charges buyers for deed preparation or "closing expenses". Those charges are negotiable before you sign, not after. The unit is registered only once the building is finished and the unit is segregated at the Registry, which can be months or years after you start paying.

How a closing runs, and how long it takes

1. Promesa de compraventa and deposit
   You sign a promise-to-purchase contract and typically pay a 10% deposit. For titled property, the promesa can be registered at the Public Registry so the seller cannot sell to someone else.
2. Due diligence
   Your lawyer checks the title, liens, mortgages, cadastral value, any tax exemption, and the condominium's certificate that fees are paid. This usually takes one to three weeks. Our Panama real estate lawyers do this before any balance is released.
3. Seller's taxes and clearances
   The seller files Forms 106 and 107, pays the 2% and the 3%, and obtains the DGI paz y salvo for the property and the IDAAN (water) paz y salvo. The Registry will not record the transfer without them.
4. Deed before a notary
   Both parties sign the escritura pública. If you are abroad, you can sign through a power of attorney.
5. Registration and payment
   The Public Registry generally takes one to three weeks, or a day or two with an expedite fee if the deed has no errors. The seller is paid once registration is confirmed, under the escrow or bank-letter terms.
6. After closing
   You file the primary residence request if it applies, and set up your NIT to monitor the property tax account. A cash resale typically takes six to eight weeks from start to finish.

Most of our foreign clients close without traveling. We run the Registry search, review the promesa, coordinate the seller's clearances, prepare the power of attorney and file the primary residence request, at a fixed fee quoted after a short consultation. You can reach us through the contact options at the end of this page.

Panama escrow and title insurance: do you need them?

Neither is legally required, but you need one secure way of holding the money until title is registered. Title insurance is optional extra protection on top of a proper title search. Panama has no title companies of the North American kind. Your lawyer does the title work, and a regulated institution should hold the funds.

Panama escrow: who may legally hold your money

In Panama, escrow is a trust-type arrangement under Law 1 of 1984 as amended by Law 21 of 2017. The Superintendency of Banks has exclusive authority to license and supervise trustees, and only licensed fiduciaries and others authorized by law may act as one.^[20] Each licensed fiduciary must post a B/.250,000 guarantee in favor of the Superintendency.^[20] It must also hold at least B/.150,000 in capital and keep separate accounts for each trust it manages.^[21]

In practice you have three options:

An escrow agent only follows payment instructions. It does not check the title. A sound escrow agreement should state:

• Who holds the funds, and the license that allows them to do so
• The due diligence period, the closing date and any extension rights
• Exact release conditions, for example a registered deed, a discharged mortgage and a condominium fees certificate
• When the deposit becomes non-refundable, and your refund right if a title defect cannot be fixed
• Which party pays the escrow fee

Expect the bank or fiduciary to ask for your passport, proof of address, bank statements and evidence of where the money came from. Send funds from an account in your own name, and start this compliance step early, because it is the most common reason closings slip.

Panama title insurance: what it costs and when it is worth it

Title insurance is a one-time premium, typically 0.5% to 1% of the property value. That works out to about USD 2,000-4,000 on a USD 400,000 home, mostly offered by international insurers. It covers defects that already existed at purchase and were not caught, including legal defense. It does not cover physical problems, later zoning changes or tax debts that arise after you buy. An owner's policy protects you, while a lender's policy protects only the bank.

Panama's Public Registry operates on public faith, so what is recorded is presumed valid in favor of good-faith buyers. For a new unit bought from a developer with a clean registry history, a careful title search usually covers the main risk. The premium makes more sense in these cases:

• The title passed through an inheritance with several heirs.
• The property changed hands several times in a short period.
• The property comes from a foreclosure or auction.
• The price is high and you are buying without ever visiting.

Who pays what at a Panama closing

By default, the seller pays the taxes and clears the property's debts, and the buyer pays to register the deed in their own name. Everything except the seller's legal tax liability can be negotiated, so the split must be written into the promesa before you pay a deposit.

Figures as of October 2026. Allocations reflect common practice in Panama, not a fixed legal rule, except where noted.

Buying through a company or foundation

Holding property in a Panamanian corporation or private interest foundation does not change the property tax, the ITBI or the capital gains tax. It adds annual costs and can change how a later sale works. Many foreign buyers use a structure for privacy or succession rather than for tax.

• Annual company fee: a corporation pays a flat annual fee (tasa única) of B/.300, at registration and every year after, plus its resident agent's fee.^[8] The Registry requires that fee to be paid before it records a sale involving a legal entity.^[22]
• Primary residence still possible: a company or foundation wholly owned by one family can register the family home as PFT, with extra documents.
• Selling the shares instead of the property: no new deed is recorded, but share sales have their own tax regime. The buyer withholds 5% of the price, and the seller's gain is taxed. The buyer also inherits every debt and liability the company has, so the due diligence is heavier, not lighter.
• Succession: Panama has no inheritance or estate tax.^[1] A foundation can pass the property to heirs without a Panamanian probate. See our guides to Panama inheritance tax and estate planning and the Panama private interest foundation, or compare structures in Panama corporation vs LLC vs foundation.

If the property will also support a residency application through the Qualified Investor (golden visa) route, check how title must be held before you choose a structure, because the immigration file depends on it. If you plan to rent short term, licensing rules apply as well, explained in our guide to Panama Airbnb investment and Law 80. We set up the structure and the purchase as one file, so the deed, the company or foundation and any residency filing line up. Tell us what you are buying through the contact options below.