Property Taxes in Panama - Panama Real Estate

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You may already know that in Panama the?exoneration?of the payment of property taxes for 20 years apply to those properties whose occupation permits were issued before December of 2011. It is important to realize that this property tax exoneration in Panama has now changed.

In Panama at the time of publishing this article, the amount of time that a (new) property enjoys an exoneration from property taxes depends on the value at which it is registered. Properties with registered values up to $100,000 are automatically granted 15 years of exoneration. The improvements whose registered value are up to $250,000 will have 10 years of exoneration and those over $250,000 will have up to 5 years of exoneration from the payment of property taxes. Keep in mind that the land on which the improvements are built is not exonerated unless it is registered under $30,000. That means you will still have to pay taxes on the land from day one, regardless of if the physical property is exonerated. This tax is divided proportionally amongst all of the residents of the building, and it is generally under $500/year.

The property tax amount is calculated based on the highest registered value. The first $30,000 dollars is always exonerated and the balance is subject to a tax of between 1.75% and 2.1%.

When you acquire Panama property in a resale that already has a registered value which is exonerated, the difference between the price that you are buying and the first registered value will define the property tax amount that is NOT exonerated. If for example you are purchasing a property on the resale market (not through a developer/not brand new) for $300,000 and was originally registered at a value of $240,000, the seller will be liable for paying property taxes on the difference, or $60,000 from the day the new sale is registered. In other words in the example above, if you then turn around and sell the property one year later for $350,000 then you as the owner will be subject to a tax between the registered value of the property and the new sell price for the amount of time that?you?ve?owned the property. It is possible, however, to file an update on the new price paid so that such difference will also be exonerated for the remaining time of the exoneration (already registered with the property). This process takes about 6 months and involves legal expenses. You?ll want an attorney who specializes in this very specific type of registry update.

While we do not claim to be property tax experts, we have great attorneys who we work with that are always standing by to help us answer Panama property tax questions.

Source: http://www.panamaequity.com/blog/property-costs/property-taxes-in-panama/

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