Panama Real Estate Taxes (Capital Gains
Tax)
There are annual taxes on the value of
real estate, plus capital gains tax on
profits from the sale of real estate,
and a transfer tax arising on sale.
The
annual tax, under Article 766 of the Fiscal
Code, is based on official valuations,
and is levied on a sliding scale, previously:
- 1.75%
from $30,000 (lowered to $20,000 in
2005) to $50,000; plus
- 1.95%
from $50,000 to $75,000; and
- 2.10%
on values above $75,000
Valuations
under the 'cadastral' system were updated
in 2005, and from 2006 the tax was based
on the new values at the following rates:
-
0.70%
on any value exceeding US$30,000 up
to US$50,000;
-
0.90%
on any value exceeding US$50,000 up
to US$75,000; and
-
1.00
% on any value in excess of US$75,000.
Capital
Gains Tax is levied on real estate gains
under Article 701 of the Fiscal Code and
Articles 89 and 90 of the Income Tax Regulations.
The rate of tax is 30% on the taxable
gain after deductions, but the calculation
basis is quite complex, at least for persons
not otherwise paying much tax.
The
tax on the transfer of real estate (not
new homes) is 2%, payable by the seller,
which is credited against capital gains
tax.
Incentives
introduced in 2004 to encourage development
gave savings on a $200,000 home over 20
years of $69,250 – or about one-third
of the purchase price of a high-quality
home. But they were finally withdrawn
on August 31, 2005, with existing projects
needing to be completed within a year.
Residences
with construction permits issued after
September 1, 2005 , however, benefited
from the following exemptions:
- Value
up to $100,000: 15 years
-
Value from $100,000 to $250,000: 10
years
- Value
over $250,000: 5 years
Land
is not exempt and property tax would continue
to be paid on it if its value is above
$30,000.
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Panama 
