Panama property tax in 2026, the primary residence exemption and the rates
Updated: 2026-08-11
This Panavanti guide is for anyone buying a home or an investment property in Panama who wants to know what the annual property tax will be, with the rates in effect in the third quarter of 2026. The tax exempts the first US$120,000 of registered value when the home is filed as a Primary Residence or Family Tax Patrimony, and charges 0.5% and 0.7% on the excess under Law 66 of 2017.
You'll find both rate tables, primary residence and investment, with worked examples on registered value. We also cover the taxes due when you sell and the step many owners miss (registering the benefit with the Directorate General of Revenue, the DGI). The figures come from PwC and three law firms we consulted in August 2026. The sources are listed at the foot of the guide.
As of August 11, 2026, Panama's property tax exempts the first US$120,000 of a primary residence's registered value and applies 0.5% up to US$700,000 and 0.7% above.
In six points
- A Primary Residence or Family Tax Patrimony exempts the first US$120,000 of the property's registered value.
- On the excess, the primary-residence rate is 0.5% from US$120,001 to US$700,000, and 0.7% above US$700,000.
- Investment properties use a separate table that exempts only US$30,000 and then charges 0.6%, 0.8% and 1.0% by bracket. A second home, a commercial unit or a lot counts as investment.
- The tax is computed on the value registered with the DGI, not the market price, and the rates apply progressively by combined brackets.
- The primary-residence benefit is not automatic. You file it with the DGI, and until you do the higher investment table applies by default.
- When selling, the standard is 2% transfer tax plus a 3% advance, creditable against the 10% capital-gains tax.
How much is property tax in Panama?
Nothing on the first US$120,000 of registered value if the property is a primary residence, and reduced rates on the excess. An investment property has only its first US$30,000 exempt, and its rates are higher. The tax is annual and is charged on the value registered with the DGI.
The governing law is Law 66 of October 17, 2017, in force since January 1, 2019. It created the Primary Residence and Family Tax Patrimony categories for tax purposes, with lower rates than those charged on property held for investment or rental.
The base is the registered (cadastral) value on file at the DGI, which is usually lower than what you paid or than a market appraisal. Ask for that registered value before you estimate your annual tax.
The two rate tables (Q3 2026)
Panama applies two progressive combined tables, one for Primary Residence or Family Tax Patrimony and one for investment properties. The figures are those in effect in the third quarter of 2026.
| Registered-value bracket | Primary Residence / FTP | Investment property |
|---|---|---|
| Up to US$30,000 | 0% (exempt) | 0% (exempt) |
| US$30,001 – US$120,000 | 0% (exempt) | 0.6% |
| US$120,001 – US$250,000 | 0.5% | 0.6% |
| US$250,001 – US$500,000 | 0.5% | 0.8% |
| US$500,001 – US$700,000 | 0.5% | 1.0% |
| Over US$700,000 | 0.7% | 1.0% |
The rates are progressive and combined. Each slice is taxed at its own rate and the amounts are added up. Figures as of Q3 2026. Verify the registered value and the rates with the DGI or a licensed accountant before you decide.
What do the Primary Residence and Family Tax Patrimony exempt?
Both exempt the first US$120,000 of registered value. A Primary Residence is the property the owner lives in permanently. The Family Tax Patrimony is the version for a family living under one roof. On the excess, the tax is 0.5% up to US$700,000 and 0.7% above that.
Only one property per family unit can hold the Family Tax Patrimony, so the US$120,000 exemption covers the habitual home and nothing else. A second home, a rental apartment or a commercial unit is taxed under the investment table, with the smaller US$30,000 exemption.
The mistake that costs owners the most is never filing. The DGI does not grant the benefit on its own. You apply with the title and the required documents, and until you do the DGI applies the higher investment table by default. Some owners overpay for years without knowing they qualified for the primary-residence rate.
Illustrative calculations (Q3 2026)
These are arithmetic examples using the tables in effect in the third quarter of 2026, applied to registered value. They do not describe a specific property or an offer.
| Primary residence, registered value US$150,000 | ~US$150/yr (0.5% on US$30,000) |
|---|---|
| Primary residence, registered value US$400,000 | ~US$1,400/yr (0.5% on US$280,000) |
| Primary residence, registered value US$1,000,000 | ~US$5,000/yr (0.5% + 0.7% by bracket) |
| Investment property, registered value US$400,000 | ~US$2,520/yr (0.6% + 0.8% by bracket) |
| Primary-residence exemption | US$120,000 of registered value |
| Investment-property exemption | US$30,000 of registered value |
When and how do you pay?
In three installments a year, due April 30, August 31 and December 31. If you have a mortgage, the bank usually acts as withholding agent. It adds the tax to your monthly payment and remits it to the DGI.
If you pay the full year up front, in a single payment within the window the DGI sets, you usually get a discount of around 10%. The cutoff date moves, so confirm it with the DGI each year. Paying late triggers surcharges. Keeping the property's taxpayer registry (RUC) current avoids that surprise.
If you bought with financing, our Panama mortgage for foreigners guide explains how the bank handles the tax inside the payment. And if you're weighing a sale, the seller-cost calculator (/en/seller-cost-calculator) estimates the transfer tax and the gains tax for you.
How much do you pay when you sell in Panama?
The seller pays a 2% transfer tax, computed on the greater of the registered value and the sale price. On top of that comes a 3% advance of income tax on the same base.
That 3% advance is credited against the capital-gains tax, which is 10% of the profit on the sale. You can take the 3% as a final payment, or settle the 10% on the actual gain and credit the 3% already advanced. If the 3% exceeds 10% of the gain, you can claim the excess back.
These sale taxes come on top of the annual property tax and cut into an investment's return. If you're buying for appreciation, project them on day one. Our foreign investors guide for Panama covers purchase structure and due diligence.
What did Law 66 change in improvement exemptions?
Law 66 eliminated the automatic improvement exemptions going forward, which for new construction could run as long as 20 years. Since the 2017 reform, new construction no longer gets that long-term exemption scheme.
Exemptions already in force are honored until they expire if the building permit was issued before January 1, 2019. According to the sources consulted, that means 5, 10 or 20 years for residential improvements, depending on value, and 10 years for commercial ones. If you're buying a recent building, ask whether it still holds an improvement exemption and until when.
The improvements status changes what you pay every year. Confirming the parcel's exact standing at the DGI and the Public Registry is part of due diligence before closing.
What works for you and what doesn't
- ✓ The US$120,000 exemption keeps the annual tax low for many primary residences.
- ✓ Taxing registered value, which usually sits below market price, favors the owner.
- ✓ The primary-residence rates (0.5% and 0.7%) are among the most competitive in the region.
- ✓ If you pay the full year in advance, you usually earn a discount on the total.
- ✗ The primary-residence benefit is not automatic and is lost if not filed with the DGI.
- ✗ Investment properties pay more, with only a US$30,000 exemption and rates up to 1.0%.
- ✗ New construction no longer accesses the long improvement exemptions that predated Law 66.
- ✗ Selling adds a 2% transfer tax and 10% on the gain (with the 3% advance).
What do you do before and after buying?
Before buying, ask the DGI for the property's registered value and its exemption status. That gives you the real annual tax instead of a guess based on the sale price. The Public Registry confirms the parcel is free of liens and current on the tax.
After buying, if you're going to live in the property, register the Primary Residence or Family Tax Patrimony with the DGI as soon as you can. That way the US$120,000 exemption applies from the first period. In areas such as Costa del Este (/en/zonas/costa-del-este) or Punta Pacifica (/en/zonas/punta-pacifica), a broker and an attorney who know the process keep the filing from dragging on.
This content is informational and does not constitute legal, tax or immigration advice. Verify current requirements with a licensed attorney in Panama before making decisions.
Sources
- taxsummaries.pwc.com — Impuesto de transferencia de 2% más adelanto de 3% del impuesto sobre la renta en la venta, e impuesto sobre la ganancia de capital de 10% en bienes inmuebles. (accessed 2026-08-11)
- taxsummaries.pwc.com — Tarifa progresiva combinada del impuesto de inmueble para propiedades no residenciales: exento hasta US$30,000, 0.6%, 0.8% y 1.0% por tramos de valor registrado. (accessed 2026-08-11)
- kraemerlaw.com — Exención de los primeros US$120,000 del valor registrado para Vivienda Principal o Patrimonio Familiar Tributario, y que el beneficio no es automático sino que debe registrarse ante la DGI. (accessed 2026-08-11)
- kraemerlaw.com — Impuestos que aplican al vender un inmueble en Panamá: 2% de transferencia y el adelanto de 3% acreditable contra el 10% sobre la ganancia. (accessed 2026-08-11)
- myd-law.com — Tramos de Vivienda Principal: exento hasta US$120,000, 0.5% entre US$120,001 y US$700,000, y 0.7% sobre el excedente de US$700,000; el régimen debe solicitarse. (accessed 2026-08-11)
- ospinalaw.com — La Ley 66 de 2017 eliminó hacia el futuro las exoneraciones de mejoras; los permisos de construcción anteriores al 1 de enero de 2019 conservan su exoneración hasta el vencimiento (5, 10 o 20 años). (accessed 2026-08-11)
Related guides: Panama Qualified Investor Visa via real estate (2026) · inversionistas extranjeros panama · Panama mortgage for foreigners, Panavanti's 2026 guide
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