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Lifestyle
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RE/MAX Paradise Team
Panama’s property tax is low by international standards and generous toward primary residences: the first $120,000 of registered value on a primary residence is fully exempt, with rates of 0.5% and 0.7% applying above that. Secondary and commercial properties use a separate, higher table starting at 0.6%. Foreign owners pay exactly the same rates as Panamanian citizens — there is no foreign-buyer surcharge.
The current framework comes from Law 66 of 17 October 2017, which reformed property taxation and took full effect on 1 January 2019. Older figures still circulating online — including a widely repeated “2.1%” rate — describe the pre-2019 regime and are no longer correct.
What are the rates for a primary residence?
If your property qualifies as a Primary Residence or Tributary Family Patrimony (TFP), this table applies to the registered value, including land and construction:
Registered value | Annual rate |
|---|---|
$0 – $120,000 | Exempt |
$120,001 – $250,000 | 0.5% |
$250,001 and above | 0.7% |
What about secondary, investment, and commercial properties?
Properties that do not qualify as a primary residence — second homes, rental and investment properties, commercial premises, and land — use a separate table with a much smaller exemption:
Registered value | Annual rate |
|---|---|
$0 – $30,000 | Exempt |
$30,001 – $250,000 | 0.6% |
$250,001 – $500,000 | 0.8% |
Above $500,000 | 1.0% |
These rates apply equally to national and foreign owners, regardless of marital status.
What does that mean in actual dollars?
Three worked examples. Note that Panama’s rates are tiered, so each band applies only to the portion of value falling within it.
Property value | As primary residence | As second home / rental |
|---|---|---|
$150,000 | $150 per year — (first $120k exempt; $30k at 0.5%) | $720 per year — (first $30k exempt; $120k at 0.6%) |
$300,000 | $1,000 per year — ($130k at 0.5% = $650; $50k at 0.7% = $350) | $1,720 per year — ($220k at 0.6% = $1,320; $50k at 0.8% = $400) |
$600,000 | $3,100 per year — ($130k at 0.5%; $350k at 0.7%) | $5,320 per year — ($220k at 0.6%; $250k at 0.8%; $100k at 1.0%) |
Illustrative calculations based on the published rate tables. Your assessed registered value may differ from your purchase price — confirm your actual liability with a Panamanian attorney or accountant.
The gap between the two columns is the point of this article. On a $300,000 home, registering as a primary residence saves roughly $720 a year — every year you own it.
How do you register as Family Patrimony?
The exemption is not automatic. You must register the property as Tributary Family Patrimony or Primary Residence with the relevant authority, providing documentation that it is your main home — typically identification and evidence of residency.
Once approved, the designation is permanent and does not expire, so long as the property remains your primary residence. It is a one-time administrative step with a recurring annual benefit, and one of the more commonly overlooked items for foreign buyers who complete a purchase and simply never file.
If you buy a home you intend to live in, put this on your post-closing checklist alongside utilities and insurance.
How is the taxable value determined?
Property tax is calculated on the registered value recorded in the Public Registry — land plus construction — not on a market appraisal or on what you believe the property is worth today.
Two practical consequences. First, the registered value can sit below current market value on older properties, which keeps the tax bill modest. Second, improvements and new construction can trigger a revaluation, so a renovation that adds registered value also raises the annual liability.
New construction has also historically attracted exoneration periods, with the terms depending on the project and the year of registration. If you are buying new or pre-construction, ask the developer specifically what exoneration applies and for how long, and get it in writing — this is a legitimate value item that varies case by case.
How does this compare internationally?
For a primary residence, Panama’s effective rates are low. A $300,000 home carrying roughly $1,000 a year is well under typical rates in most of the United States and Canada, and the $120,000 exemption means modest homes often pay nothing at all.
Against regional competitors it is less one-sided: Costa Rica applies a flat 0.25%, which is cheaper than Panama’s 0.7% top primary-residence band on higher-value homes. Panama wins outright below $120,000 and on mid-range primary residences; Costa Rica’s flat rate wins at the top end. Our Panama vs Costa Rica comparison covers the wider picture.
What else do owners pay annually?
Property tax is rarely the largest recurring cost. Budget alongside it:
HOA / PH fees — in condominium buildings these routinely exceed the property tax bill, particularly in amenity-heavy towers.
Insurance
Utilities — air conditioning dominates in the city and at the beach
Property management, if renting or absent
Frequently asked questions
How much is property tax in Panama?
On a primary residence: nothing on the first $120,000 of registered value, then 0.5% from $120,001 to $250,000 and 0.7% above that. Second homes and commercial property: exempt to $30,000, then 0.6%, 0.8% above $250,000, and 1.0% above $500,000.
Do foreigners pay higher property tax in Panama?
No. The same rates apply to national and foreign owners regardless of nationality or marital status. Panama has no foreign-buyer surcharge of the kind found in Canada, Australia, or parts of Europe.
Is the $120,000 exemption automatic?
No. You must register the property as Tributary Family Patrimony or Primary Residence with supporting documentation. Once approved it is permanent while the property remains your main home.
Is the 2.1% property tax figure correct?
No. That figure reflects the pre-2019 regime. Law 66 of 2017, effective 1 January 2019, replaced it with the tiered tables above.
Working out the true carrying cost of a property you are considering? Book a free consultation — we will walk through the numbers on specific listings with you.
General information only, not tax or legal advice. Rates, exemptions, and assessment practice change. Confirm your specific liability with a Panamanian attorney or licensed accountant.