Property Tax Exonerations

If you are interested in buying Real Estate in Panama, you should like to know if they are tax exempted.

For years, the Panamanian Tax Code allowed exemption from property taxes for a period of twenty years without any differentiation in primary or secondary home like in other countries, which was a real attraction for real estate activity. However, Law No. 6 of 2005 sets new calculations for the implementation of property tax, which exempts only:

1. Properties registered at a value of 30,000 USD or less including improvements to the land, i.e. construction

2. Land used exclusively for farming and registered with the Ministry of Agriculture and Development at less than 150,000 USD.

However, the government tried to diminish the effects of this new law with another modification, the Law No. 21 of 2008 which establishes an extension to the real Estate Tax exemptions regulated by Law No. 6 of 2005. Builders have up to July 1, 2009 to obtain a building permit, and until December 31, 2011 to acquire an occupancy permit to qualify for the tax exemption. The period of mentioned exemption is for twenty years, start counting from the time the constructions is registered or the corresponding authorities issue the occupation permit or whatever happens first.

After this, the residential properties will be exonerated as follows:

• 15 years - properties up to USD 100,000.00
• 10 years - properties of USD 100,000.00 to USD 250,000.00
• 5 years - properties up to USD 250,000.00