Panama Property Tax: the Primary Residence exemption and 2026 rates
Updated: 2026-08-11
Panama's property tax exempts the first US$120,000 of registered value when the home is filed as a Primary Residence or Family Tax Patrimony, and applies reduced rates of 0.5% and 0.7% on the excess, under Law 66 of 2017 as in effect in the third quarter of 2026.
This guide, updated for August 2026, explains the two rate tables (primary residence and investment), how the tax is computed on registered value, the taxes due when you sell, and the step many owners miss: registering the benefit with the Directorate General of Revenue (DGI). It is general information and does not replace advice from a licensed attorney or accountant in Panama.
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.
Key takeaways
- 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 (second homes, commercial, land) use a separate table: exempt to US$30,000, then 0.6%, 0.8% and 1.0% by bracket.
- 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: it must be filed with the DGI, or 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?
Property tax is an annual levy on the value registered with the DGI, and the rate depends on whether the property is filed as a Primary Residence or as an investment property. For a primary residence, the first US$120,000 is exempt and the excess pays reduced rates; for an investment property, the exemption reaches only US$30,000 and the rates are higher.
The governing framework is Law 66 of October 17, 2017, which took effect on January 1, 2019 and overhauled the prior regime. That law created the Family Tax Patrimony and Primary Residence categories for tax purposes, with lower rates than those applied to property held for investment or rental.
One essential detail is the calculation base: the tax is not applied to what you paid or to a market appraisal, but to the registered (cadastral) value on file at the DGI, which is usually lower. That is why it is worth knowing your property's registered value before estimating the annual tax.
The two rate tables (Q3 2026)
Panama applies two progressive combined tables: one for Primary Residence / Family Tax Patrimony and one for investment properties. Figures in effect as of 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% |
Rates apply progressively by combined brackets: each slice is taxed at its own rate and the amounts are summed. Figures as of Q3 2026; verify the registered value and rates with the DGI or a licensed professional before deciding.
The Primary Residence exemption and Family Tax Patrimony
A Primary Residence is a property used permanently as the owner's home, and the Family Tax Patrimony is the version for the family that lives in it under one roof; both give the right to exempt the first US$120,000 of registered value. On the excess, the tax is 0.5% up to US$700,000 and 0.7% thereafter.
Only one property per family unit can hold the Family Tax Patrimony, so the US$120,000 exemption is meant for the habitual home, not for a portfolio. A second home, a rental apartment or a commercial unit is taxed under the investment table, with the smaller US$30,000 exemption.
The point that costs owners the most money is that the benefit is not granted on its own: it must be filed with the DGI along with the title and required documents. If it is not registered, the DGI applies the higher investment table by default, and many owners overpay for years without knowing they qualified for the primary-residence rate.
Illustrative calculations (Q3 2026)
Arithmetic examples from the tables in effect as of the third quarter of 2026, applied to registered value; they do not represent 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 |
How and when you pay
Property tax is paid in three installments during the year, due on April 30, August 31 and December 31. Banks act as withholding agents on many mortgages, so if you have a loan the bank often includes the tax in the monthly payment and remits it to the DGI.
An owner who pays the full year up front, in a single payment within the window the DGI sets, usually receives a discount (commonly around 10%); it is worth confirming the exact cutoff date with the DGI each year, since it can vary. Paying late triggers surcharges, so keeping the property's taxpayer registry (RUC) current avoids surprises.
If you bought with financing, see our Panama mortgage for foreigners guide to understand how the bank handles the tax inside the payment. And if you are weighing a sale, the seller-cost calculator (/en/seller-cost-calculator) helps estimate the impact of the transfer and gains taxes.
Taxes when you sell: transfer and capital gains
When selling a property in Panama, the standard is a 2% transfer tax paid by the seller, computed on the greater of the registered value and the sale price. Added to that is a 3% advance of income tax, also on that greater base.
That 3% advance is credited against the capital-gains tax, which is 10% of the profit made on the sale. The seller may 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, the excess may be claimed as a refund.
These sale taxes are separate from the annual property tax and directly affect an investment's return. For anyone investing with appreciation in mind, it is wise to project them from the start; our foreign investors guide for Panama adds the structuring and due-diligence context.
Improvement exemptions: what Law 66 changed
Before Law 66, new construction enjoyed temporary exemptions on the value of improvements that could reach 20 years. The 2017 reform eliminated those automatic exemptions going forward, so new construction no longer accesses the traditional long-term exemption scheme.
Exemptions that were already in force are honored until they expire when the building permit was issued before January 1, 2019: according to the sources consulted, that means terms of 5, 10 or 20 years for residential improvements by value, and 10 years for commercial improvements. So when buying a relatively recent property, it is worth checking whether it keeps any active improvement exemption and until when.
Because the improvements status affects how much you pay each year, confirming the parcel's exact standing at the DGI and the Public Registry is part of good due diligence before closing.
Advantages and considerations
- ✓ The US$120,000 exemption keeps the annual tax low for many primary residences.
- ✓ Taxing registered value rather than market price generally favors the owner.
- ✓ The primary-residence rates (0.5% and 0.7%) are among the most competitive in the region.
- ✓ Paying the full year in advance usually earns 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 to do before and after buying
Before buying, ask the DGI for the property's registered value and its exemption status, so you estimate the real annual tax rather than relying on the sale price alone. Checking the Public Registry confirms the parcel is free of liens and current on the tax.
After buying, if the property will be your habitual home, the most rewarding step is to register the Primary Residence or Family Tax Patrimony with the DGI as soon as possible, so the US$120,000 exemption applies from the first period. In high-demand areas of Panama City, 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 help get the benefit registered without delays.
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: 2026 Financing Guide
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