A few things you need to know about taxes. Which are the base for good property management.

In Panamá, IBI stands for Impuesto de Bienes Inmuebles (Real Estate Property Tax).

Since 2019, Panama has a progressive IBI system where the rates depend entirely on how the property is registered. Understanding these two categories is the difference between paying a high tax and a very low one.

IBI Rates (Annual)

Panama divides properties into two tax "regimes":

Regime A: Primary Residence (Patrimonio Familiar)

This is for your main home where you live. You must apply for this status; it is not automatic. | 

Property Value               Annual Tax Rate

First $120,000.00          0% Exempt

$120,001 to $700,000     5%

Above $700,000           0.7%

Regime B: Secondary/Investment (Other Properties)

This applies to raw land, vacation homes, rentals, or properties owned by corporations that haven't declared a beneficiary.

Property Value               Annual Tax Rate

First $30,000       0%, Exempt

$30,001 to $250,000 0.6%

$250,001 to $500,000     0.8%

Above $500,000           1.0%

There are other mechanisms that can help you with paying taxes, and this is where a well-informed owner will manage their expenses. This will help you enjoy the benefits of the know how and your property.

Monica has worked as a lawyer and has extensive experience, so she offers her services and has provided us with the information necessary to write this short article, which I am sure will be of great help to you in your next investment.

 Payment Schedule & Discounts

The IBI is an annual tax, but the government collects it in three installments:

1. April 30

2. August 31

3. December 31

The DGI grants you a 10% discount on the total amount If you pay the entire year’s tax upfront before March 1st

Transaction Taxes (Paid at Closing)

When you buy a property, there are two other specific taxes involved. While these are usually paid by the Seller, they are often a point of negotiation:

• Transfer Tax (ITBI): 2% of the higher value between the sale price and the registered (cadastral) value.

• Capital Gains Tax: 3% of the sale price (paid as an advance withholding).

Important: As a buyer, you should ensure your lawyer obtains a "Paz y Salvo de Inmueble" (Tax Clearance Certificate). This proves the seller has paid all IBI up to the date of sale; otherwise, you inherit their debt.

The "Grandfathered" 20-Year Exemption

If you are buying a resale property, it might already have a 20-year exemption attached to it.

• The Rule: Houses that received their construction permits before 2012 were granted a flat 20-year exemption on the building value, regardless of the price.

• The Benefit: This exemption stays with the house. If you buy a home built in 2010 today (in 2026), you still have 4 years remaining where you pay $0 tax on the house structure.

• The Catch: You still pay tax on the land if the land is valued over $30,000.

Here are the specific laws and articles that back up each point we've discussed:

1. The Core Tax Law: Law 66 of 2017

This is the "Parent Law" that created the two-tier system (Regime A and Regime B).

• What it did: It modified Articles 764, 766, and 766-A of the Tax Code.

• Regime A (Article 766): Establishes the Patrimonio Familiar Tributario (Family Tributary Patrimony) and Vivienda Principal (Primary Residence) rates. This is where the $120,000 exemption and the 0.5%–0.7% rates come from.

• Regime B (Article 766-A): Establishes the rates for secondary properties, commercial lots, and raw land. This is where the $30,000 exemption and the 0.6%–1.0% rates come from.

2. The Construction Exemption: Law 28 of 2012

While Law 66 changed the tax rates, the duration of exemptions for new construction is governed by a combination of Law 28 (2012) and subsequent updates in the Tax Code.

• The 5, 10, and 20-year tiers: These are administrative rules within the Tax Code (specifically derived from reforms to Article 81 of Law 6 of 2005) that scale the exemption period based on the building's value ($120k, $300k, etc.).

• Exemption Limit: It is important to note that Law 66 effectively ended the old "20-year automatic exemption" for luxury properties, replacing it with the shorter 5-year window for properties over $300,000.

Law 122 (Tourism Incentives): * Investors in tourism-related projects (like the Vista Mar expansion) are eligible for a 100% Income Tax Credit.

• Includes 15-year exoneration on property taxes and 20-year exoneration on import duties for construction materials.

If you want to receive a message with useful information about taxes in Panamá Vs USA, Europe clic here