Property Taxes in Panama
Tax Rate on Rental Income |
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| Monthly Income | US$1,500 | US$6,000 | US$12,000 |
| Tax Rate | 5.83% | 15.76% | 20.38% |
Nonresidents are only taxed on their Panamian-sourced income. Married couples are generally taxed separately but they may opt for joint taxation.
Rental income tax
Rental income is taxed at progressive rates. Individuals who earn rental income can deduct the following from their gross rent: municipal and national taxes, maintenance and repairs, administrative expenses, and depreciation of the property.
Capital gains tax
Taxable capital gains are calculated by deducting the following from the property value at the time of disposal (selling price or market value): acquisition costs, improvement costs, and transaction costs.
Capital gains realized from transactions that are part of ordinary business activities are taxed at 10%, not withholding.
Value added tax
Leasing immovable property in Panamá is subject to VAT, levied at a flat rate of 7% on the gross rent.
Entities with an average monthly turnover less than US$3,000 (during the previous tax year) and an average yearly turnover of US$36,000 are exempted from VAT.
Corporate taxation
Income tax
Income earned by companies is taxed at a flat corporate tax rate of 25%. Income-generating expenses are deductible when calculating taxable income.
Rental income tax
Rental income earned by corporations is taxed at a rate of 15.76%.
Capital gains tax
Capital gains realized by companies from transactions that are part of ordinary business activities are taxed at the standard progressive income tax rates. Capital gains realized by companies from transactions not part of ordinary business activities are taxed at a special flat rate of 10%. A 5% withholding tax is levied on the transaction, which will then be credited against the taxpayer’s capital gains tax liability.
Property buying and selling costs/taxes
| Cost item | Rate or amount |
| Property transfer tax | 2.00% |
| Agent fee buyer | - |
| Agent fee seller | 3.00-5.00% |
| Legal | 2.00% |
| Notary | 0.10% |
| Roundtrip cost | 7.10% - 9.10% |
| Source: Global Property Guide, PWC | |
Property Holding tax
Real estate located in Panamá, whether urban or rural, is subject to property taxes. The tax base depends on the total value of the land, plus all improvements, as appraised by the Land Commission (Oficina de Catastro). Real estate transactions at prices above the appraisal value automatically increase their value for tax purposes. The property tax is imposed at progressive rates.
Property tax for primary residence
| Taxable income (US$) | 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 | 0.90% on all income over US$700,000 |
Property tax for other property
| Taxable income (US$) | 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 |