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Property taxes in Panama City are significantly lower than most international markets, with primary residences enjoying favorable rates and new constructions benefiting from multi-year exemptions. Understanding these tax structures can save you thousands of dollars annually and influence your investment decisions in Panama's dynamic real estate market.
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Panama City offers attractive property tax rates with primary residences paying 0% on the first $120,000 value and 0.5% on amounts up to $700,000.
New construction properties can receive tax exemptions lasting 5-20 years depending on value, making them particularly attractive for investors.
| Property Value | Primary Residence Annual Tax | Non-Primary Residence Annual Tax |
|---|---|---|
| $150,000 | $150 | $720 |
| $300,000 | $900 | $1,620 |
| $500,000 | $1,900 | $3,620 |
| $700,000 | $2,900 | $5,620 |
| $1,000,000 | $5,000 | $10,620 |
What purchase price should you expect for apartments in Panama City?
As of September 2025, average apartment prices in central Panama City are approximately $2,483 per square meter.
This means a 100-square-meter apartment typically costs around $248,300, while a smaller 70-square-meter unit averages $173,810. Premium areas like Casco Viejo and Punta Pacifica command higher prices, often exceeding $3,000 per square meter.
The purchase price directly affects your property tax calculation since Panama uses the sales price as the cadastral value for tax purposes. Luxury developments in areas like Costa del Este and San Francisco can reach $4,000 per square meter or more.
When budgeting for your apartment purchase, factor in that this purchase price will determine your annual property tax obligations throughout your ownership period.
How does the government assess your property's official value?
Panama uses your actual purchase price as the official cadastral value for property tax calculations.
Unlike many countries that conduct separate government assessments, Panama's tax system is straightforward - the price you pay becomes the taxable value. This system prevents disputes over assessed values and ensures transparency in tax calculations.
If you buy a $300,000 apartment, that exact amount becomes your cadastral value for tax purposes. The government doesn't conduct independent appraisals or adjust values annually based on market fluctuations.
This approach means your property tax remains predictable throughout your ownership, based on your original purchase price rather than changing market values.
Does your apartment qualify for new construction tax exemptions?
New construction apartments in Panama City often qualify for significant property tax exemptions that can last 5-20 years depending on the property value.
Properties valued up to $120,000 receive 20-year exemptions, those between $120,001-$300,000 get 10-year exemptions, and apartments over $300,000 qualify for 5-year exemptions. These exemptions apply to the construction portion of the value, not the land.
When purchasing a previously-owned apartment, check with the seller about remaining exemption periods. If the original buyer received a 10-year exemption and has owned the property for 3 years, you'll benefit from the remaining 7 years.
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Even older properties may still have exemptions if they were constructed within the exemption timeframe, making them attractive investment opportunities.
How long do property tax exemptions last in Panama City?
Property tax exemption durations in Panama City depend on your apartment's total value and transfer to new owners within the exemption period.
| Property Value Range | Exemption Duration | Applies To |
|---|---|---|
| Up to $120,000 | 20 years | Construction portion |
| $120,001 - $300,000 | 10 years | Construction portion |
| Over $300,000 | 5 years | Construction portion |
| Land value | No exemption | Always taxable |
| Expired exemptions | May continue | Legacy properties |
What are the annual property tax rates based on cadastral value?
Panama applies different tax rates depending on whether the apartment serves as your primary residence or investment property.
Primary residences benefit from preferential rates with 0% tax on the first $120,000 value, 0.5% on amounts between $120,001-$700,000, and 0.7% on values exceeding $700,000. Non-primary residences face higher rates with no tax on the first $30,000, then 0.6% on $30,001-$250,000, 0.8% on $250,001-$500,000, and 1% on amounts over $500,000.
These progressive rates ensure that luxury properties contribute more to the tax base while keeping costs reasonable for average homeowners. The primary residence designation requires that you live in the property as your main home.
Investment properties and vacation homes automatically fall into the higher non-primary residence category, reflecting their different use and ownership patterns.
What tax brackets and thresholds apply to Panama City apartments?
Panama City apartments are subject to progressive tax brackets that favor primary residence owners and provide generous exemptions at lower value levels.
The tax structure creates clear thresholds that help property owners calculate their annual obligations. Primary residences enjoy the most favorable treatment with a substantial $120,000 exemption before any taxes apply.
Investment properties face taxation starting at $30,000 value, reflecting the government's preference for encouraging primary residence ownership over speculative investment. The brackets ensure that higher-value properties contribute proportionally more to municipal services and infrastructure.
These thresholds remain fixed and don't adjust annually for inflation, providing predictable long-term tax planning for property owners.
How much annual tax would you pay on a $150,000 apartment?
A $150,000 apartment in Panama City generates different tax obligations depending on its use as a primary residence or investment property.
For primary residence: You pay 0% on the first $120,000 and 0.5% on the remaining $30,000, totaling $150 annually. For investment property: You pay 0% on the first $30,000 and 0.6% on the remaining $120,000, totaling $720 annually.
This represents just 0.10% of the property value for primary residences and 0.48% for investment properties. The low tax burden makes Panama City attractive for both homeowners and investors compared to international markets.
If your apartment qualifies for new construction exemptions, you may pay zero property tax for the exemption period, making the effective rate even lower during those years.
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How much annual tax would you pay on a $300,000 apartment?
A $300,000 apartment generates significantly different tax bills based on primary versus investment use in Panama City.
Primary residence owners pay 0% on the first $120,000 and 0.5% on the remaining $180,000, totaling $900 annually. Investment property owners pay 0% on the first $30,000, 0.6% on the next $220,000 ($1,320), and 0.8% on the final $50,000 ($400), totaling $1,720 annually.
The primary residence rate represents 0.30% of property value while investment properties face 0.57% annually. This substantial difference incentivizes owner-occupancy and helps maintain neighborhood stability.
For comparison, this $900 annual tax for primary residences is often less than one month's condo fees in a well-maintained building, making property taxes a minor component of total ownership costs.
How much annual tax would you pay on a $500,000 apartment?
A $500,000 apartment represents a luxury purchase in Panama City with corresponding tax implications that vary significantly by use classification.
Primary residence taxation: 0% on first $120,000, 0.5% on next $380,000 ($1,900), totaling $1,900 annually. Investment property taxation: 0% on first $30,000, 0.6% on next $220,000 ($1,320), 0.8% on next $250,000 ($2,000), totaling $3,320 annually.
These amounts represent 0.38% and 0.66% of property value respectively, remaining competitive with international luxury markets. The progressive structure ensures that high-value properties contribute appropriately to municipal services.
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Even at this luxury level, property taxes remain manageable compared to comparable markets in North America or Europe where rates often exceed 1-2% annually.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Panama versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
Are there additional municipal or local taxes beyond national property tax?
Panama City apartment owners typically face no regular municipal taxes beyond the national property tax system as of September 2025.
Unlike many international markets that layer municipal, county, and state taxes, Panama consolidates property taxation at the national level. This simplified structure eliminates confusion and reduces administrative burden for property owners.
Some minor municipal fees may apply for specific services like garbage collection or street lighting, but these are typically minimal and service-specific rather than broad-based taxes. Major infrastructure and municipal services are funded through the national property tax system.
This streamlined approach makes Panama City attractive for international investors who appreciate predictable tax obligations without multiple governmental layers demanding separate payments.
What's the estimated yearly property tax cost as a percentage of property value?
Property tax rates in Panama City range from 0.10% to 1.00% of property value annually, depending on value and use classification.
- $150,000 primary residence: 0.10% annually ($150)
- $300,000 primary residence: 0.30% annually ($900)
- $500,000 primary residence: 0.38% annually ($1,900)
- $150,000 investment property: 0.48% annually ($720)
- $300,000 investment property: 0.57% annually ($1,720)
These rates remain significantly below international averages where property taxes often exceed 1-2% annually. The progressive structure ensures that luxury properties contribute proportionally while keeping costs reasonable for average homeowners.
New construction exemptions can reduce these rates to zero for 5-20 years, making the effective tax rate even lower during exemption periods and enhancing investment returns.
It's something we develop in our Panama property pack.
How do property taxes compare with condo fees and other ownership costs?
Property taxes represent a minor component of total apartment ownership costs in Panama City compared to condo fees and other expenses.
Condo fees typically range $1.50-$2.50 per square meter monthly, meaning a 100-square-meter apartment costs $1,800-$3,000 annually in maintenance fees alone. Property taxes on a $300,000 apartment total just $900 annually for primary residences.
Additional ownership costs include property insurance ($300-$800 annually), utilities, and occasional municipal service fees. The total annual cost structure shows property taxes as typically the smallest component after the initial purchase.
This cost structure makes Panama City attractive for long-term ownership since the ongoing tax burden remains minimal while condo fees provide tangible services like security, maintenance, and amenities that enhance property value and livability.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Property taxes in Panama City offer significant advantages for both primary residence owners and investors, with rates well below international standards and generous exemptions for new construction.
The progressive tax structure, combined with predictable costs based on purchase price rather than assessed value, makes Panama City an attractive destination for real estate investment and primary residence establishment.
Sources
- Panama City Price Forecasts
- Panama Property Taxes Exemptions and Rates
- Panama Property Taxes Legal Guide
- Panama Real Estate Taxes Guide
- Low Property Tax Countries Analysis
- Panama City Real Estate Market
- Tax Reasons to Retire in Panama
- Panama Property Price History