Property-Related Taxes in Panama
Non-residents are taxed in Panama only on income derived from Panamanian sources. Married couples are generally taxed separately, although joint taxation is available by election.
Rental income is taxed at progressive rates, with broad deductibility of expenses. Capital gains on property sales are generally taxed at a flat rate of 10%. Leasing property is subject to VAT at 7%, although small landlords may qualify for exemption. Corporate income is taxed at 25%.
Panama levies annual property tax at progressive rates, with preferential treatment for primary residences. Property transaction costs are moderate, with roundtrip costs typically ranging from 7% to 9%.
Annual Property Tax
All real estate located in Panama, whether urban or rural, is subject to annual property tax. The tax base is determined by the total value of the land and improvements, as assessed by the Land Commission (Oficina de Catastro). Transactions concluded above the assessed value automatically increase the taxable value of the property.
Property tax is levied at progressive rates, with different regimes applying to primary residences and other properties.
Property tax for primary residence (2026)
| Taxable income (US$) | Tax rate |
| Up to US$120,000 | 0% |
| US$120,001 – US$700,000 | 0.50% on band over US$120,000 |
| Over US$700,000 | 0.70% on all income over US$700,000 |
Property tax for other property (non-primary)
| Taxable income (US$) | Tax rate |
| Up to US$30,000 | 0% |
| US$30,001 – US$250,000 | 0.60% on band over US$30,000 |
| US$250,001 – US$500,000 | 0.80% on band over US$250,000 |
| Over US$500,000 | 1.00% on all income over US$500,000 |
Rental Income Tax
Rental income earned in Panama is subject to progressive income tax rates. When calculating taxable rental income, individuals may deduct allowable expenses from gross rent, including municipal and national taxes, maintenance and repair costs, administrative expenses, and depreciation of the property.
Rental Income Tax Rates (2026)
| Taxable rental income (US$) | Tax rate |
| Up to US$11,000 | 0% |
| US$11,000 – US$50,000 | 15% |
| Over US$50,000 | 25% on all income over US$50,000 |
Capital Gains Tax on Property
Taxable capital gains are calculated as the difference between the property’s disposal value (selling price or market value) and the sum of acquisition costs, improvement expenses, and transaction-related costs. Capital gains arising from transactions that form part of ordinary business activities are taxed at a flat rate of 10%, without withholding.
Value Added Tax (VAT)
Leasing immovable property in Panama is subject to value added tax (VAT) at a flat rate of 7%, applied to gross rental income.
Entities with an average monthly turnover below US$3,000 in the previous tax year, and an average annual turnover below US$36,000, are exempt from VAT.
Corporate Taxation in Panama
If property is owned and rented through a Panamanian company, corporate taxation applies instead of individual rental income tax.
Corporate income is taxed at a flat rate of 25%. Expenses incurred in the production of taxable income are generally deductible. Capital gains realized by companies from transactions that form part of ordinary business activities are taxed at the standard corporate income tax rates.
Capital gains arising from transactions not considered part of ordinary business activities are taxed at a special flat rate of 10%. A withholding tax of 5% is levied on the transaction and credited against the final capital gains tax liability.
Property Buying and Selling Costs in Panama
| Cost Type | Range |
| Property Transfer Tax | 2.00% |
| Agent Fee (Buyer) | - |
| Agent Fee (Seller) | 3.00% - 5.00% |
| Legal Costs | 2.00% |
| Notary Costs | 0.10% |
| Costs Paid By Buyer | 4.10% |
| Costs Paid By Seller | 3.00% - 5.00% |
| Roundtrip Cost | 7.10% - 9.10% |
| Source: Global Property Guide, PWC | |
