Property-Related Taxes in Panama

Non-resident individuals are generally taxed in Panama only on Panamanian-source income, including income arising from real estate situated in Panama.

Rental Income Tax

Rental income derived from Panamanian real estate is generally subject to individual income tax on net taxable income. Expenses incurred in producing taxable rental income or preserving its source may generally be deductible, subject to the applicable tax rules.

Individual income tax is calculated progressively:

Rental Income Tax Rates (2026)

For comparison purposes, annual gross rental income of $18,000, $72,000 and $144,000 is assumed to incur deductible expenses equal to 30% of gross rent, leaving net taxable rental income of $12,600, $50,400 and $100,800, respectively.

Applying Panama's progressive individual income tax rates results in estimated annual income tax of approximately $240, $5,950 and $18,550, respectively. This represents effective income-tax burdens of approximately 1.3%, 8.3% and 12.9% of gross rental income.

The 30% expense assumption is used solely to standardize the international comparison. Actual taxable rental income depends on the expenses that are deductible under Panamanian tax law. The calculation excludes annual property tax and any applicable ITBMS.

Capital Gains Tax on Property

Capital gains arising from the disposal of Panamanian real estate are generally subject to 10% tax on the taxable capital gain.

For a normal real-estate transfer, the seller generally makes a 3% advance income-tax payment calculated on the higher of the gross selling price and the property's cadastral value. The 3% advance is credited against the final capital-gains liability. Subject to the applicable rules, the taxpayer may treat the advance as definitive or calculate the final tax at 10% of the actual taxable gain and seek recovery of an excess payment.

A separate 2% real-estate transfer tax generally also applies to the higher of the selling price and cadastral value.

The taxable gain broadly reflects the difference between the disposal value and the property's allowable tax basis, taking into account qualifying costs and adjustments.

Corporate Taxation

A Panamanian company is generally subject to corporate income tax at 25% of net taxable income derived from Panamanian sources.

Qualifying expenses incurred in generating taxable rental income or preserving its source are generally deductible.

Where a company's disposal of real estate qualifies for Panama's special capital-gains regime, the taxable capital gain is generally subject to the 10% capital-gains rate, together with the applicable advance-payment mechanism.

Where buying and selling real estate instead forms part of the company's ordinary business activity, different ordinary income-tax treatment can apply depending on the circumstances.

Property Buying and Selling Costs in Panama

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)

Property tax for other property (non-primary)

Consequently, the maximum marginal annual property-tax rate for an ordinary investment property is 1.00%, although the effective rate on the property's total taxable value is lower because the tax is progressive.