How much tax do you pay for an apartment in Panama?

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What's the current property tax rate for residential apartments in Panama?

Property tax rates in Panama depend on whether you declare your apartment as a primary residence or not.

For primary residences, you pay 0.5% on values between $120,001 and $700,000, then 0.7% on anything above $700,000.

For secondary residences or investment properties, the rates are higher: 0.6% on values between $30,001 and $250,000, 0.8% on values between $250,001 and $500,000, and 1.0% on values above $500,000.

As of September 2025, these rates have remained stable and apply to all residential apartments regardless of the buyer's nationality.

How do they calculate the property tax—on purchase price or another value?

Panama calculates property tax based on the registered value (cadastral value) listed in the Panama Public Registry, not the actual purchase price you paid.

The cadastral value is typically lower than the market value, which means your actual tax burden is often less than what you'd expect based on the purchase price.

This registered value gets updated periodically by government assessors, but changes don't happen frequently.

When you buy property in Panama, the notary will register this value officially, and that's what the tax authority uses for all future property tax calculations.

What's the minimum property value before you start paying property tax?

Panama provides generous tax-free thresholds that vary depending on how you use the property.

Primary residences enjoy complete exemption on the first $120,000 of registered value, meaning you pay zero property tax if your apartment's cadastral value is at or below this amount.

Secondary residences, investment properties, or any property not declared as your main home get a smaller exemption of $30,000.

These thresholds make Panama particularly attractive for first-time homebuyers and investors with modest apartment purchases.

Can you break down the exact tax brackets with percentages?

How much annual property tax would I pay on a $100,000 apartment?

For a $100,000 apartment registered as your primary residence, you would pay zero property tax annually because it falls below the $120,000 exemption threshold.

If this same apartment is not your primary residence (investment property or vacation home), you would pay $420 annually in property tax.

The calculation for the non-primary residence: first $30,000 is exempt, then $70,000 × 0.6% = $420.

This significant difference highlights the importance of properly declaring your primary residence status with Panamanian tax authorities.

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What about a $250,000 apartment—how much tax annually?

A $250,000 apartment declared as your primary residence would incur $650 in annual property tax.

The calculation: first $120,000 is exempt, then ($250,000 - $120,000) × 0.5% = $130,000 × 0.5% = $650.

If this apartment is not your primary residence, the annual tax jumps to $1,320.

The non-primary calculation: first $30,000 exempt, then $220,000 × 0.6% = $1,320, demonstrating the substantial savings from primary residence status.

It's something we develop in our Panama property pack.

And for a $500,000 apartment—what's the annual tax burden?

A $500,000 apartment as your primary residence would cost $1,900 annually in property tax.

The calculation: $120,000 exempt, then $380,000 × 0.5% = $1,900 (since it's still below the $700,000 threshold for the higher 0.7% rate).

For a non-primary residence, this same apartment would cost $3,320 annually in property tax.

The non-primary calculation: $30,000 exempt, next $220,000 × 0.6% = $1,320, plus $250,000 × 0.8% = $2,000, totaling $3,320.

Is there a maximum cap on annual property tax payments?

Panama does not impose an absolute dollar cap on annual property tax payments.

However, the progressive rate structure means the highest possible rate is 0.7% for primary residences (on values above $700,000) and 1.0% for other properties (on values above $500,000).

For extremely high-value properties, you would continue paying these maximum rates on the entire value above the thresholds.

This means a $2 million primary residence would pay: exempt on first $120,000, 0.5% on next $580,000 ($2,900), and 0.7% on the remaining $1.3 million ($9,100), totaling $12,000 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 tax exemptions or holidays for new apartment construction?

Panama offers attractive tax exemptions for new residential construction that can significantly reduce your property tax burden for years.

Construction value up to $120,000 qualifies for a 20-year exemption on the improvement value (not the land).

Construction value between $120,001 and $300,000 gets a 10-year exemption on improvements.

Construction value above $300,001 receives a 5-year exemption on improvements.

It's important to note that these exemptions apply only to the building improvements, not the land value, which continues to be taxed according to the regular schedule if it exceeds the $30,000 threshold.

Do foreign buyers pay different tax rates than Panamanians?

Foreign buyers pay exactly the same property tax rates as Panamanian citizens with no discrimination or additional charges.

All buyers, regardless of nationality, can qualify for the same exemptions, including the primary residence benefits and new construction exemptions.

To claim primary residence status, foreigners must officially declare the property as their principal residence with the tax authorities, just like Panamanian citizens.

This equal treatment makes Panama particularly welcoming to international property investors and retirees seeking favorable tax conditions.

It's something we develop in our Panama property pack.

How do you pay property tax—monthly, quarterly, or annually?

Property tax in Panama is paid in three installments throughout the year with specific deadlines: April 30, August 30, and December 31.

Each installment represents one-third of your total annual tax obligation, making it easier to manage cash flow compared to a single large payment.

If you prefer to pay the entire annual amount upfront, you can receive a 10% discount by paying before March 1st of the tax year.

This early payment discount can result in meaningful savings, especially for higher-value properties, and helps with budgeting since you complete your tax obligation early in the year.

What penalties apply if you miss property tax payment deadlines?

Late payment of property tax in Panama incurs a 10% surcharge for each missed installment deadline.

If you miss the April 30 deadline, you pay 10% extra on that installment; miss August 30, and you pay another 10% surcharge on that portion.

These penalties accumulate, so missing all three deadlines could result in 30% in total surcharges on top of your base tax amount.

The penalties are calculated per installment period, not as compound interest, but they still represent a significant additional cost that's easily avoided by paying on time.

It's something we develop in our Panama property pack.

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.

Sources

1. Kraemer Law - Panama Property Taxes
2. Kiplinger - Tax Reasons to Retire in Panama
3. Taxes for Expats - Buying Property in Panama Guide
4. PWC Tax Summaries - Panama Individual Other Taxes
5. Dentons - Global Tax Guide Panama
6. Kery Cruz - Panama Property Tax
7. EDTIJ - Property Exemptions Panama
8. Multilaw - Real Estate Guide Panama