Panamanian property tax: the truth
Panamanian property tax laws are made confusing by poor translation. Here are the facts.
Panamanian property tax laws are made confusing by poor translation. Here are the facts.
Don’t believe everything you think you read, because not everything you read may be what you think it is!
Panamanian property tax creates much confusion among potential ex-pat property buyers. The reason: the English translation of Panamanian Laws #6 of June 1987, #18 of August 7 1989, and #15 of July 13 1992, available widely on the Internet and elsewhere.
The translation of Article 1.16 states: “A freeze on real estate taxes, as long as the home is in your name and is the only property you own.” That, in a list of discounts available, sounds to most people as if there is no Panamanian property tax for pensionados.
Not what law says
Not true at all. What the law says is that if a pensioner owns a home in his or her own name, and it is that person’s only property, the government cannot raise the tax on it even if the property is reassessed. Any increase in Panamanian property tax is frozen. If the tax is decreased, the pensioner gets the benefit.
The English translation of Article 1.17 reads: “Exemption from payment of tax assessment if it is the only property you own and it is the place in which you reside.” Sounds quite clear?
Not about property tax
Nope! This has nothing to do with Panamanian property tax. The confusion is because of the difficulty in translating legal terms from Spanish to English. The Article refers only to a tax that is levied on real estate when public works have been carried out in the area. This type of tax is normally added to the water bill.
So, is there Panamanian property tax? Yes, and it’s on a sliding scale, as follows:
Properties with a registered value of $30,000 or lower do not pay Panamanian property tax. Tax is paid as follows on properties of a higher value:
-1.75% from $30,000 to $50,000; plus -1.95% from $50,000 to $75,000; and -2.10% on values above $75,000.
This is a combined scale.
For example, a property valued at $150,000 would attract the following annual tax:
From $30,000 to $50,000: $350.00
From $50,000 to $75,000: $487.50
From $75,000 to $150,000: $1,750.00
TOTAL $2,412.50 But not all is lost. Houses or apartments for which construction permits are issued before September 1, 2005, and for which construction is completed before August 31, 2006, are exempt from property tax for 20 years from the date of completion. The remainder of the exemption is transferable if the property is sold.
Permits after September 2005
Residences with construction permits issued after September 1, 2005, have the following exemptions:
-Value up to $100,000: 15 years -Value from $100,000 to $250,000: 10 years -Value over $250,000: 5 years
Land is not exempt and property tax would continue to be paid on it if its value is above $30,000.