$0
Tax on the first $120,000 of a registered primary residence
0.5%
Primary residence rate from $120,001 to $700,000
3
Installments a year, due April, August and December
10%
Discount for paying the full year before March 1
Understanding Property Tax in Panama
Rules, exemptions and how to stay compliant
In short: Panama property tax is based on a property’s registered value, with primary residences exempt on the first $120,000; the rate is 0.5% from $120,001 to $700,000 and 0.7% above that. Other homes have a $30,000 exemption and rates from 0.6% to 1.0%. Owners may pay in three annual instalments or receive a 10% discount by paying the full year before March 1.
Panama has long attracted international investors and expats with its favorable tax laws, including low property taxes and a generous exemption for primary residences. Whether you are buying a condo in Panama City, a beachfront home in Pedasí or a mountain retreat in Boquete, understanding the property tax system helps you protect your investment and avoid penalties.
Panama’s property tax, known as the Impuesto de Bienes Inmuebles, is charged on a property’s registered (cadastral) value, not its market value. The tax is progressive: each band of value is taxed at its own rate, and higher-value properties pay higher rates on the upper bands.
Last updated: October 2026
Property Tax Rates (Since the 2019 Reform)
Panama reformed its property tax in 2019 to simplify the rates and lower the tax on primary residences. Each band of value is taxed only at its own rate.
Primary Residence
If the home is registered as your family or primary residence (Patrimonio Familiar Tributario or Vivienda Principal):
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Up to $120,000: exempt
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$120,001 to $700,000: 0.5%
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Over $700,000: 0.7%
Second Homes, Rentals and Other Property
If the property is not registered as your primary residence, for example a rental, a vacation home or a lot:
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Up to $30,000: exempt
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$30,001 to $250,000: 0.6%
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$250,001 to $500,000: 0.8%
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Over $500,000: 1.0%
What About New Construction?
Homes built under building permits issued from 2012 through 2018 may still have a time-limited exemption on the value of the construction (not the land): up to 20 years for construction valued up to $120,000, 10 years from $120,001 to $300,000, and 5 years above $300,000. An existing exemption can end if the home is registered as a primary residence, and the rules for newer construction depend on the permit and registration history. Ask your attorney to confirm the tax status of any property before you buy.
Who Qualifies for the Primary Residence Rates?
Who Can Register
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Families who live in the home permanently, including spouses, single parents and relatives living together
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Adults living alone, under the Vivienda Principal category
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Retirees and pensioners, including foreign retirees
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A Panamanian corporation (S.A.), private interest foundation or trust, when its owners or beneficiaries are the same family
Only one property per owner can be registered, and it must be lived in as a home, not rented out full time.
How to Apply
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Submit a request to the DGI (Dirección General de Ingresos)
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Include your ID or passport, proof of title from the Public Registry and a sworn declaration, plus documents for your category (for example a marriage certificate or company records)
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The DGI has three months to decide. Once approved, the lower rates apply
Requirements vary by category, so most owners have their attorney file the request.
Paying Your Property Tax
When and How to Pay
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Pay once a year, or in three installments due by April 30, August 31 and December 31
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Paying the full year before March 1 earns a 10% discount
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Late payments carry a 10% surcharge plus interest
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Pay at local banks, online through the DGI e-Tax system, or through your attorney or property manager
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If you have a mortgage and the home is not registered as your primary residence, the bank usually collects the tax with your payments
How the Value Is Determined
The DGI calculates the tax on the cadastral value, which is usually:
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The value declared in the public deed (escritura pública) when you bought, plus
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The value of improvements or new construction declared after the purchase
Checking Your Account
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Visit the DGI website at dgi.mef.gob.pa
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Log in to e-Tax with your property details
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View or pay your balance, request exemptions and download your tax clearance certificate (paz y salvo)
Example: What Would You Pay?
$200,000 Home as Your Primary Residence
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First $120,000: $0
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Next $80,000 at 0.5%: $400
Annual tax: $400
The Same Home as a Rental
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First $30,000: $0
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Next $170,000 at 0.6%: $1,020
Annual tax: $1,020
Taxes When You Buy or Sell
Transfer Tax (2%)
When a property is sold, a 2% transfer tax is charged on the sale price or the cadastral value, whichever is higher. It is paid by the seller.
New in 2026: under Law 546, in force since September 1, 2026, the first $120,000 of the value is exempt on the first sale of a new home, if the deed is signed within two years of the occupancy permit. Between $120,000 and $200,000, only the amount above $120,000 is taxed, at reduced rates. Above $200,000, the normal 2% applies to the amount over $120,000.
Capital Gains Tax (3%)
Sellers pay 3% of the sale price or the cadastral value, whichever is higher, before the deed is registered. Most sellers accept this 3% as their final capital gains tax. In some cases a seller can instead file to be taxed on the actual profit, with the 3% credited. Your attorney will tell you which option is better for you.
See what else sellers pay on our Sell page.
Tax Clearance (Paz y Salvo)
A property tax clearance certificate (paz y salvo) from the DGI is needed before a sale can be registered. Buyers should have their attorney check the property’s tax account for unpaid balances, surcharges and exemptions during due diligence.
Our Buyers Guide walks you through due diligence step by step.
Your lawyer should collect this certificate as part of due diligence.
Key Takeaways
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A registered primary residence pays no tax on the first $120,000 of value, then 0.5% up to $700,000 and 0.7% above that.
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Second homes, rentals and lots pay nothing on the first $30,000, then 0.6% to 1.0% as the value rises.
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Homes owned by a family corporation, foundation or trust can also qualify for the primary residence rates.
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Tax is due once a year or in three installments, with a 10% discount for paying the full year before March 1.
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On a sale, the seller pays the 2% transfer tax and the 3% capital gains payment. New homes get a transfer tax break under Law 546.
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Ask your attorney to confirm the tax status of any property before you buy.
Buying soon? See Buying & Closing Costs for every cost at closing, and Title & Due Diligence for the checks to finish before you pay a deposit.
Need Help Managing Property Taxes in Panama?
We offer full support through our legal partners for:
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Property registration
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Tax declarations
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Annual payment reminders
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Exemption applications
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Real estate legal guidance
Let us take the guesswork out of owning property in Panama, so you can focus on enjoying it.
Frequently Asked Questions
How is property tax calculated in Panama?
It is based on the property’s registered (cadastral) value, not its market value. The rates are progressive, so each band of value is taxed at its own rate.
What are the property tax rates for a primary residence?
The first $120,000 is exempt. Value from $120,001 to $700,000 is taxed at 0.5%, and value over $700,000 at 0.7%.
What are the rates for rentals and second homes?
The first $30,000 is exempt. Value from $30,001 to $250,000 is taxed at 0.6%, from $250,001 to $500,000 at 0.8%, and over $500,000 at 1.0%.
Who qualifies for the primary residence rates?
Owners who live in the home as their family or primary residence and register it with the DGI. This includes families, adults living alone, retirees and pensioners (including foreign retirees), and family-owned corporations, foundations and trusts. Only one property per owner can be registered.
Can a home owned by a corporation get the primary residence rates?
Yes, if the corporation, foundation or trust is owned by the same family that lives in the home and the required documents are filed with the DGI.
When is property tax due?
It can be paid once a year or in three installments due by April 30, August 31 and December 31. Late payments carry a 10% surcharge plus interest.
Is there a discount for paying early?
Yes. Paying the full year’s tax before March 1 earns a 10% discount.
Do buyers of new homes pay transfer tax in 2026?
The 2% transfer tax is paid by the seller. Under Law 546, in force since September 1, 2026, the first $120,000 of the value is exempt on the first sale of a new home when the deed is signed within two years of the occupancy permit.
How do I make sure a property has no unpaid property tax?
Have your attorney check the property’s tax account with the DGI during due diligence. A property tax clearance certificate (paz y salvo) is needed before the sale can be registered.
This guide is general information, not tax or legal advice. Tax rules change, so confirm the details for your property with a Panamanian attorney or the DGI. Last updated October 2026.