What taxes would apply if I want to sell my property?
There are two specific real estate taxes: the Sale Transfer Tax which is 2% and the Sale Capital Gain Tax which is 3%. The seller will be required to pay these two taxes before the sale is finalized. The payment will depend on the maximum value attained between the selling prices or the value of the registered property.
Property Tax Calculation in Panama
Taxes are obligations that people and/or companies have to pay to contribute with the State expenses and investments financing.
In the Property Tax case in Panama, the Tax Code has three different fees for the purposes of its calculation.
The first corresponds to a Combined Progressive Rate (TPC) that applies to all property or real estate.
The Tax Code indicates that the combined progressive rate of this tax is as follows:
- 1.75% on the taxable base amount in excess of thirty thousand balboas up to fifty thousand balboas.
- 1.95% on the taxable base amount in excess of fifty thousand balboas up to seventy-five thousand balboas.
- 2.10% on the taxable base amount in excess of seventy-five thousand balboas
The second calculation corresponds to the Special Rate (TE), which is used to calculate the tax on the value of the land of all the horizontal properties during the tax exemption while property improvements.
The law indicates that the exemption of the first thirty thousand balboas of this tariff will not be applied to the lands of the buildings subject to the Horizontal Property Regime, during the period while the improvements value is legally exempted; in these cases a rate of 1% will be applied. After the expiration of the improvements exemption period will apply the regular rate.
The third calculation corresponds to the Alternative Combined Progressive Rate (TPCA) and demands the following:
- 0.75% on the taxable tax base amount in excess of thirty thousand balboas up to one hundred thousand balboas.
- 1% on the excess tax base amount in excess of one hundred thousand balboas.
To be entitled to this rate you must be up-to-date in the payment of property tax, its cadastral value must be updated and the proposed value in any appraisal must have been approved by the Ministry of Economy and Finance or by the Land Administration National Authority.
Once the cadastral authorities accept the valuation value voluntarily submitted by the owner, the owner won´t be able to modify it with said authorities during the following 5 years, regardless of whether is made a national valuation.
You must know…
- Taxable base amount means the sum of the value of the land and the improvement built, if there were any.
- Horizontal Property Regime is a "special type of property, constituted on real estate units, capable of independent use and with access to the public, where there is coexistence of individual propiertorship over private property and co-ownership over common property." Panama Legislative procedures, Article 1.