• About Us
  • Contact Us
  • Privacy Policy
  • Terms
  • Unsubscribe
No Result
View All Result
Live and Invest Overseas
FREE REPORT
BEST PLACES TO RETIRE
*No spam: We will NEVER give your email address to anyone else.
  • HOME
  • COUNTRIES
    • Top Destinations
      • Portugal
      • Panama
      • Belize
      • France
      • Colombia
      • Dominican Republic
      • Thailand
      • Mexico
      • Spain
      • Argentina
    • Browse All Countries
    • Best For
      • Retire Overseas Index
      • Health Care
      • Cost of Living
      • Investing in Real Estate
      • Editor’s Picks For Retirement
      • Establishing Residency
      • Starting an Online Business
      • Single Women
      • Playing Golf
  • BUDGETS
    • Super Cheap ($)
      • Cuenca, Ecuador
      • Chiang Mai, Thailand
      • The Philippines
      • Las Tablas, Panama
      • Granada, Nicaragua
    • Cheap ($$)
      • Algarve, Portugal
      • Medellin, Colombia
      • Boquete, Panama
      • Carcassone, France
      • Buenos Aires, Argentina
    • Affordable ($$$)
      • Abruzzo, Italy
      • Barcelona, Spain
      • Las Terrenas, Dominican Republic
      • Puerto Vallarta, Mexico
      • Costa de Oro, Uruguay
    • Luxury On A Budget ($$$$)
      • Ambergris Caye, Belize
      • Paris, France
      • Panama City Beach Area
  • Real Estate
  • ARCHIVES
    • Living & Retiring Overseas
    • Raising A Family Abroad
    • Foreign Residency & Citizenship
    • Offshore Diversification
    • Our Latest On Coronavirus ⚠️
  • Making Money
    • International Real Estate
    • Banking
    • Employment
    • Investing
  • CONFERENCES
  • BOOKSTORE
Live and Invest Overseas
  • HOME
  • COUNTRIES
    • Top Destinations
      • Portugal
      • Panama
      • Belize
      • France
      • Colombia
      • Dominican Republic
      • Thailand
      • Mexico
      • Spain
      • Argentina
    • Browse All Countries
    • Best For
      • Retire Overseas Index
      • Health Care
      • Cost of Living
      • Investing in Real Estate
      • Editor’s Picks For Retirement
      • Establishing Residency
      • Starting an Online Business
      • Single Women
      • Playing Golf
  • BUDGETS
    • Super Cheap ($)
      • Cuenca, Ecuador
      • Chiang Mai, Thailand
      • The Philippines
      • Las Tablas, Panama
      • Granada, Nicaragua
    • Cheap ($$)
      • Algarve, Portugal
      • Medellin, Colombia
      • Boquete, Panama
      • Carcassone, France
      • Buenos Aires, Argentina
    • Affordable ($$$)
      • Abruzzo, Italy
      • Barcelona, Spain
      • Las Terrenas, Dominican Republic
      • Puerto Vallarta, Mexico
      • Costa de Oro, Uruguay
    • Luxury On A Budget ($$$$)
      • Ambergris Caye, Belize
      • Paris, France
      • Panama City Beach Area
  • Real Estate
  • ARCHIVES
    • Living & Retiring Overseas
    • Raising A Family Abroad
    • Foreign Residency & Citizenship
    • Offshore Diversification
    • Our Latest On Coronavirus ⚠️
  • Making Money
    • International Real Estate
    • Banking
    • Employment
    • Investing
  • CONFERENCES
  • BOOKSTORE
No Result
View All Result
Live and Invest Overseas
No Result
View All Result
Home In Focus: Panama

A Guide To Understand The New Property Tax Law In Panama

What You Need To Know About Panama’s New Tax Laws

Dusty Tubbs by Dusty Tubbs
Oct 25, 2019
in In Focus: Panama
0
new property tax law
221
SHARES
3.2k
VIEWS
Share on FacebookShare on Twitter

Panama has long been known as one of the oldest and best-known tax havens in the world. Now the country is making it even easier and less expensive to own a home, property, and farmland.

A new property tax law went into effect on Jan. 1, 2019, and understanding it may save you thousands of dollars in property taxes.

Under the new law, there are basically three new property tax schemes:

  • Properties under US$120,000 (of registered value) are exempt from property tax. This is an increase from the previous US$30,000 tax exemption. Under this new law there are no more “land or improvement taxes.”
  • Properties valued from US$120,001 up to US$700,000 will now pay 0.5% on the difference over the US$120,000 exemption. All properties over US$700,000 will pay 0.7% on the amount over US$700,000.
  • To qualify, the property must be registered as “Patrimonio Familiar” (Family Patrimony), or as “Vivienda Principal” (Primary Residence) for the new tax scheme to be applied to the property. (This is an application that you must complete and submit to receive the new taxation.)

Patrimonio Familiar is a property that is destined for permanent family habitation use by its owner(s).

Vivienda Principal is destined for permanent residential habitation by its owner(s), and the property does not constitute a Patrimonio Familiar.

Panama’s new property tax structure has caused some confusion for expats—both for those wanting to purchase and to those who already own.

Personally, I found it very straightforward to understand, but please keep in mind that I’m not a tax expert, so please seek professional help for your particular situation.

Here are some essential things to know before applying for the new tax:

  1. If your property is currently tax exempt, you will not want to re-register it under the new tax scheme. Wait until your exemption has expired, then file for the Patrimonio Familiar tax.
  2. Properties valued from US$120,001 up to US$700,000 will now pay 0.5% on the difference over the US$120,000 exemption.
  3. All properties over US$700,000 will pay 0.7% on the amount over US$700,000. To qualify, the property must be registered as “Patrimonio Familiar” (Family Patrimony), or as “Vivienda Principal” (Primary Residence) for the new tax scheme to be applied to the property. (This is an application that you must complete and submit to receive the new taxation.) Patrimonio Familiar is a property that is destined for permanent family habitation use by its owner(s). Vivienda Principal is destined for permanent residential habitation by its owner(s), and the property does not constitute a Patrimonio Familiar. Panama’s new property tax structure has caused some confusion for expats—both for those wanting to purchase and to those who already own.
  4. If you don’t know if your property has an existing exemption, no problem. Just obtain your property tax information to determine the status (and remaining time) on your exemption. (I recommend seeking professional assistance for this step.)
  5. If your property was purchased in a corporation, the property value and exemptions remain the same. (Again, seek professional assistance.)
  6. It’s rare but possible that a property was purchased with a tax exemption but you have not received the exemption. During the process of registering the property with the Dirección General de Ingresos (DGI), the system may have changed the information. In this case, you will need to formally request the DGI to equalize the exemption. (Again, get help for this.)
  7. If you own more than one property, only your primary residence (Patrimonio Familiar) has the right to receive the new tax schedule.
  8. All additional residencies, land, commercial, and/or industrial properties will be taxed according to this schedule:
    • Valued up to US$30,000: Exempt.
    • US$30,001 to US$250,000: Taxed at 0.6%.
    • US$250,001 to US$500,000: Taxed at 0.8%.
    • Values over US$500,001: Taxed at 1.0% (only the excess of the threshold is taxed).
    • Values over US$700,001: Taxed at 0.7% (only the excess of the threshold is taxed).

On a US$850,000 home, the owner would be exempt on the first US$120,000; US$120,001 to US$700,000 is taxed at 0.5%; US$700,001 and over would be taxed at 0.7%.

Agricultural Land

An exemption also applies to all farmland.

To receive the exemption, the property must:

  • Be used exclusively for farming.
  • Be valued under US$150,000.

If you own farmland, it is important to know that your home cannot be a part of the farm. You will want to subdivide your property so your home is on a separate lot from the farm.

You must also re-apply every five years for the agricultural exemption.

Pay Your Property Tax

Remember, it is incumbent on you to pay your property tax!

You will never receive a property tax bill… never, ever.

Should you not pay your property tax, the only reminder will come when you sell your property, when you will receive a bill for all your past due taxes, plus a large fine. Actually, it’s more of a lien than a bill. You will not be allowed to transfer the title to the new owner until the tax bill is paid in full.

Why The Changes?

Under the new law, most of the property in Panama will now be tax exempt, because much of the property is valued under US$120,000.

Changes to the property tax scheme were implemented with the hopes of encouraging people living on Rights of Possession (ROP) property to register their property. They would then have “title” to their property without having to incur the additional financial burden of paying taxes on that property.

ROP property is excluded from all taxes (land, capital gains, transfer fees, and property taxes). It is simply never levied.

The government has been under a lot of pressure to reform the real estate industry, and getting land properly titled is a major improvement. Keeping land ownership affordable makes it easier to convince people to title their land.

Time To Invest In Panama

There is no better time to invest in Panama than right now.

While Panama City has become more expensive, there are still excellent opportunities to purchase an existing home, buy land and build to your specifications, to invest in agriculture, or to just buy raw land.

This is a perfect country to start or expand your real estate diversification plan.

Dusty Tubbs

 

 

Share88Tweet55
Previous Post

This Emerging Market Is Winning The U.S.-China Trade War

Next Post

The 10 Most Romantic Places In The World To Retire

Dusty Tubbs

Dusty Tubbs

After he’d been in the U.S. Navy for more than 30 years, Dusty decided it was time for a change. Retiring from the Navy, Dusty next became a professor for the Ventura Community College District before going to work with a big box retailer. The downturn in the economy in Hawaii, where he was living at retirement, prompted Dusty and his wife Carolyn to seek new opportunities and new adventures overseas. The couple moved to Chitré, Panama, in 2013, where they are now full-time residents and adventure seekers and Dusty is reinventing his life as a freelance copywriter and photographer.

Related Posts

A view of the colorful buildings in Panama City, Panama during a sunny afternoon
In Focus: Panama

This Apartment In Panama City, Panama Is Your Key To Residency

by Lief Simon
May 12, 2022
0

I've lived in Panama for about 15 years... And I've invested more money here than anywhere else... From farmland and...

Read more
A small house in Cerro Punta, with bright green grass and blue skies

Tierras Altas: The New Expat Haven In Panama

May 10, 2022
A beach with a palm tree in Puerto Armuelles, Panama

Why Living In Puerto Armuelles As Retiree Is A Dream Come True

April 28, 2022
A view of Cinta Costera in Panama City, Panama

One Of The Greatest Melting Pots

April 25, 2022
Beaches in Taboga island Panama

The Top Places To Visit In Panama To Escape The City

April 14, 2022
Skyscraper cityscape of Panama City, Panama

Buying Real Estate In Panama: The Complete Expat Guide

March 31, 2022
A view of Panama City during sunrise

How Panama Became The World’s Top Offshore Haven

March 17, 2022
Next Post
Istria beach croatia

The 10 Most Romantic Places In The World To Retire

A world full of fun, adventure, and profit awaits! Sign up for our free daily e-letter, Overseas Opportunity Letter, and we'll send you a FREE report on the 10 Best Places To Retire In Style Overseas Today.

Start Your New Life Today, Overseas

Get Your Free Panama Report Today!

​​Simply enter your email address below and we'll send you our FREE REPORT - 101 Things You'll Wish Someone Had Told You About Panama.
 

LIOS Resources


  • New To LIOS
  • Ask An Expert
  • Media Center
  • Contact Us
  • FAQs

Quick Links


  • Best Places To Live
  • Best Places To Retire
  • Finding A Job Overseas
  • Real Estate

Sign up for our free daily e-letter, Overseas Opportunity Letter, and get your FREE report: The 10 Best Places To Retire Overseas In 2022

  • About Us
  • Contact Us
  • Privacy Policy
  • Terms
  • Unsubscribe

© 2008-2021 - Live and Invest Overseas - All Rights Reserved.

No Result
View All Result
  • Home
  • Countries
  • Budgets
  • Archives
  • News
  • Events
  • Bookstore
  • Newsletters
  • About Us
  • Members Area
  • Contact Us

© 2008-2021 - Live and Invest Overseas - All Rights Reserved.

The World’s Best Places To Be In 2022?

Discover Them Here…

WANT TO RETIRE OVERSEAS?

Sign up for our free daily e-letter, Overseas Opportunity Letter, and we’ll immediately send you a free report on the 10 BEST PLACES TO RETIRE in style overseas. Each day you’ll learn about the best opportunities for international living, retiring overseas, offshore diversification and asset protection, and investing in real estate around the world.

Get Your Free Panama Report Today!
 

​​Learn more about ​​​PANAMA and other countries in our free, daily Overseas Opportunity Letter​​, as well as our ​In Focus: ​Panama ​newsletter​​​​​​. Simply enter your email address below and we’ll send you our FREE REPORT – ​​​101 Things You'll Wish Someone Had Told You About Panama.