Authored by the expert who managed and guided the team behind the Panama Property Pack
Everything you need to know before buying real estate is included in our Panama Property Pack
Buying property in Panama as a foreigner involves several costs beyond the purchase price, including transfer taxes, legal fees, and registration expenses that you need to plan for carefully.
Panama uses the US dollar as its official currency, which makes budgeting easier for international buyers, but you still need to understand exactly which fees apply to your specific situation.
We constantly update this blog post to reflect the latest tax rates, fee structures, and market practices in Panama.
And if you're planning to buy a property in this place, you may want to download our pack covering the real estate market in Panama.
Overall, how much extra should I budget on top of the purchase price in Panama in 2026?
How much are total buyer closing costs in Panama in 2026?
As of early 2026, the total buyer closing costs in Panama typically range from 2% to 5% of the purchase price for cash buyers (around USD 4,000 to USD 10,000 on a USD 200,000 property, or approximately EUR 3,700 to EUR 9,200), and this percentage increases to 3% to 7% if you are financing with a mortgage.
The minimum extra budget possible in Panama, if you keep expenses to the absolute legal minimum, sits around 0.8% to 1.5% of the purchase price (roughly USD 1,600 to USD 3,000 on a USD 200,000 property, or EUR 1,500 to EUR 2,800), though this bare-bones approach is risky for foreigners unfamiliar with local procedures.
The maximum extra budget you should realistically plan for in Panama reaches about 7% of the purchase price (around USD 14,000 on a USD 200,000 property, or EUR 12,900), which accounts for full legal support, escrow services, translations, thorough due diligence, property valuation, and mortgage-related bank fees.
Whether your closing costs in Panama fall at the low end or high end depends mainly on whether you buy with cash or a mortgage, how much legal and due diligence support you need, whether you require translation services, and whether the deal includes any negotiated tax contributions from the seller.
What's the usual total % of fees and taxes over the purchase price in Panama?
Most buyers in Panama end up paying between 2.5% and 4.5% of the purchase price in total fees and taxes when buying with cash, which covers legal work, registry costs, notary fees, and due diligence expenses.
The realistic low-to-high percentage range for standard property transactions in Panama spans from about 2% for very straightforward deals up to 7% when buyers take on some seller-side costs or purchase through more complex structures.
Out of this total percentage in Panama, roughly 0.5% to 1.5% typically goes to government-related costs like registration fees and notarization, while the larger portion of 1.5% to 3% goes to professional service fees such as lawyers, escrow agents, and due diligence providers.
By the way, you will find much more detailed data in our property pack covering the real estate market in Panama.
What costs are always mandatory when buying in Panama in 2026?
As of early 2026, the mandatory costs when buying property in Panama include registration fees at the Public Registry to officially record ownership, a notarized public deed (escritura pública) to formalize the transfer, and basic title and lien verification to ensure the property is free of encumbrances.
Optional but highly recommended costs for buyers in Panama, especially foreigners, include independent lawyer review and due diligence (covering permits, HOA solvency, tax clearance, and boundary issues), escrow services to protect your funds during the transaction, and certified translation or interpreter services if you do not read legal Spanish fluently.
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What taxes do I pay when buying a property in Panama in 2026?
What is the property transfer tax rate in Panama in 2026?
As of early 2026, the property transfer tax rate in Panama is 2% of the higher of the purchase price or the cadastral value, plus there is a 3% advance payment mechanism tied to capital gains compliance that typically applies to the seller but can affect deal negotiations.
There are no extra transfer taxes specifically for foreigners buying property in Panama, as the tax framework is based on the property's value and transaction type rather than the buyer's nationality.
Buyers in Panama generally do not pay VAT (called ITBMS, at 7%) on standard residential resale purchases, but special reduced rates of 0.5%, 1.5%, or 2.5% (based on value bands) can apply to first transfers of new construction properties, and in those cases the 2% transfer tax may not apply.
Stamp duty in Panama is charged at USD 0.10 per USD 100 of the contract value, but it only applies to certain commercial contracts, so it is usually not a significant cost for standard residential home purchases.
Are there tax exemptions or reduced rates for first-time buyers in Panama?
Panama does not offer a specific transfer tax exemption or reduced rate for first-time buyers at the transaction stage, but significant tax relief is available through annual property tax reductions if you register the home as your primary residence or family patrimony.
If you buy property through a company in Panama instead of as an individual, you will face additional ongoing costs such as annual franchise taxes (around USD 300), registered agent fees, and accounting expenses, though this structure can offer benefits for estate planning or liability management.
There is a meaningful tax difference between buying a new-build and a resale property in Panama: eligible new-build first transfers can qualify for special reduced tax rates and may avoid the standard 2% transfer tax entirely, while resale properties typically face the full 2% transfer tax plus the 3% advance mechanism.
To qualify for primary residence property tax exemptions in Panama, you must register the property as your family patrimony with the relevant authorities and provide documentation proving it is your main home, which typically involves submitting identification and residency evidence.
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.
Which professional fees will I pay as a buyer in Panama in 2026?
How much does a notary or conveyancing lawyer cost in Panama in 2026?
As of early 2026, lawyer or conveyancing support in Panama typically costs around 1% to 1.5% of the purchase price for a standard residential deal, which works out to roughly USD 2,000 to USD 3,000 (EUR 1,850 to EUR 2,800) on a USD 200,000 property.
Legal fees in Panama are usually charged as a percentage of the property price for standard transactions, though some lawyers offer flat-rate packages for simpler deals or itemized billing for more complex purchases.
Translation or interpreter services for foreign buyers in Panama typically cost between USD 150 and USD 400 (EUR 140 to EUR 370) for a straightforward closing, with higher costs if you need certified translations of multiple documents like powers of attorney, corporate documents, or bank paperwork.
A tax advisor is optional if you are buying personally and not renting out immediately, but if you plan to rent the property or purchase through a company, budget between USD 300 and USD 1,000 (EUR 280 to EUR 920) for professional tax guidance in Panama.
We have a whole part dedicated to these topics in our our real estate pack about Panama.
What's the typical real estate agent fee in Panama in 2026?
As of early 2026, the typical real estate agent commission in Panama is around 5% of the sale price, which on a USD 200,000 property amounts to approximately USD 10,000 (EUR 9,200).
In Panama, the seller usually pays the agent commission, not the buyer, though this is a market norm rather than a legal requirement and can occasionally be negotiated or split depending on the deal structure.
The realistic low-to-high range for agent fees in Panama runs from about 3% for very motivated sellers or direct deals up to 6% for full-service representation, with 5% being the most common standard.
How much do legal checks cost (title, liens, permits) in Panama?
Legal checks in Panama, including title search, lien verification, and permits review, typically cost between USD 300 and USD 1,000 (EUR 280 to EUR 920), depending on complexity, and are often bundled into your lawyer's overall fee.
Property valuation or appraisal fees in Panama, usually required if you are financing the purchase, range from USD 300 to USD 700 (EUR 280 to EUR 650) for standard apartments or homes, with higher fees for unusual or large properties.
The most critical legal check that should never be skipped in Panama is the title and lien verification at the Public Registry, because unpaid debts, liens, and boundary disputes are all recorded there and can become your problem if not identified before closing.
Buying a property with hidden issues is something we mention in our list of risks and pitfalls people face when buying real estate in Panama.
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What hidden or surprise costs should I watch for in Panama right now?
What are the most common unexpected fees buyers discover in Panama?
The most common unexpected fees buyers discover in Panama include higher-than-expected HOA or PH maintenance fees (especially in Panama City towers with amenities), special assessments or reserve fund shortfalls in the building community, cadastral value surprises that affect tax calculations, utility deposits or reconnection fees, and extra paperwork costs if you close via power of attorney from abroad.
Yes, you could inherit problems from unpaid property taxes or debts when buying in Panama, which is why checking the property's tax status with DGI and verifying there are no outstanding liens at the Public Registry is essential before closing.
Buyers do sometimes get scammed with fake listings or fake fees in Panama, with common patterns including fake "reservation fees," fraudulent "closing fees," or pressure to wire money outside of escrow, so you should always verify title and ownership through the Public Registry and use escrow or a trusted lawyer-controlled account.
Fees that are usually not disclosed upfront by sellers or agents in Panama include HOA special assessments and reserve fund adequacy, building-specific rules that create extra costs (like move-in deposits, renovation deposits, or mandatory insurance requirements), and the true condition of the property's cadastral registration.
In our property pack covering the property buying process in Panama, we go into details so you can avoid these pitfalls.
Are there extra fees if the property has a tenant in Panama?
If the property has a tenant in Panama, you may face extra costs including security deposit handling and transfer (typically held by the previous owner), prorated rent adjustments at closing, and legal review fees for examining the existing lease agreement, which together might add USD 200 to USD 500 (EUR 185 to EUR 460) to your transaction.
When purchasing a tenanted property in Panama, you inherit the existing lease agreement as the new landlord, which means you must honor the lease terms, maintain the property according to the contract, and follow proper legal procedures for any tenant-related matters.
Terminating an existing lease immediately after purchase in Panama is generally not possible unless the lease includes an early termination clause or the tenant agrees, because Panama's rental laws protect tenants' rights to remain until the lease naturally expires.
A sitting tenant in Panama can affect the property's market value in both directions: it may reduce the price by 5% to 10% for buyers who want to move in immediately, but it can also be attractive to investors who value the immediate rental income and tenant stability.
If you want to optimize your rental strategy, you can read our complete guide on how to buy and rent out in Panama.
We have made this infographic to give you a quick and clear snapshot of the property market in Panama. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
Which fees are negotiable, and who really pays what in Panama?
Which closing costs are negotiable in Panama right now?
The negotiable closing costs in Panama include who pays the 2% transfer tax and 3% advance (commonly seller-side but can be shifted), legal fees (flat rate versus percentage), escrow fees (can be split or paid by one party), and agent commission allocation (typically seller pays but not legally required).
Closing costs that are fixed by law or regulation and cannot be negotiated in Panama include the Public Registry fees for recording the deed, notarization costs set by official tariffs, and the actual tax rates themselves (though who pays them economically can be negotiated).
Buyers in Panama can realistically achieve discounts of 10% to 25% on negotiable professional fees like legal services and escrow, and can sometimes negotiate to have the seller cover registry incidentals or specific repairs as credits toward closing costs.
Can I ask the seller to cover some closing costs in Panama?
Asking the seller to cover some closing costs in Panama is quite common and has a reasonable likelihood of success, especially in buyer-friendly market conditions or when the property has been listed for an extended period.
The specific closing costs that sellers in Panama are most commonly willing to cover include transfer-related taxes and withholdings, specific repair credits, registry and notary incidentals, and sometimes a portion of the buyer's legal fees as part of the overall price negotiation.
Sellers in Panama are more likely to accept covering closing costs when the property has been on the market for several months, when the market favors buyers, when the seller is motivated by relocation or financial needs, or when the buyer is making a clean cash offer with a fast closing timeline.
Is price bargaining common in Panama in 2026?
As of early 2026, price bargaining is very common in Panama's real estate market, especially for resale properties, and sellers generally expect some negotiation rather than accepting the first offer at asking price.
Buyers in Panama typically negotiate between 5% and 12% below the asking price on resale properties (USD 10,000 to USD 24,000 off a USD 200,000 listing, or EUR 9,200 to EUR 22,000), with tighter discounts on newly launched projects and larger discounts on stale listings or properties needing renovation.
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What monthly, quarterly or annual costs will I pay as an owner in Panama?
What's the realistic monthly owner budget in Panama right now?
The realistic monthly owner budget in Panama for a typical 100 square meter apartment ranges from USD 200 to USD 600 (EUR 185 to EUR 555), depending on the building's amenities, location, and your utility usage patterns.
The main recurring expense categories that make up this monthly budget in Panama include HOA or PH maintenance fees (usually the largest component), electricity (which varies significantly with air conditioning use), water, gas, internet, and building-specific charges like parking or storage fees.
The realistic low-to-high range for monthly owner costs in Panama spans from about USD 120 (EUR 110) for a modest apartment with few amenities and low utility use, up to USD 800 or more (EUR 740+) for a luxury tower with extensive services, full-time staff, and high air conditioning needs.
The monthly cost that tends to vary the most in Panama is electricity, because air conditioning is essential in Panama's tropical climate and consumption depends heavily on your usage habits, apartment orientation, and whether you have energy-efficient equipment.
You can see how this budget affect your gross and rental yields in Panama here.
What is the annual property tax amount in Panama in 2026?
As of early 2026, annual property tax in Panama is calculated on a progressive scale based on the property's cadastral value, with rates that can be significantly reduced if the property is registered as your primary residence or family patrimony.
The realistic low-to-high range for annual property taxes in Panama spans from effectively zero for properties registered as family patrimony below certain thresholds, up to several thousand dollars for high-value properties, with most mid-range residential properties paying between USD 200 and USD 1,500 (EUR 185 to EUR 1,385) annually.
Property tax in Panama is calculated based on the cadastral value (not market value), which is typically lower than the actual purchase price, and the tax authority DGI applies progressive rates that increase for higher-value properties.
Exemptions and reductions are available in Panama for property owners who register their home as a primary residence or family patrimony, and DGI offers a 10% early-payment discount if you pay the full year's tax upfront rather than in the three standard installments (April 30, August 31, and December 31).
We created this infographic to give you a simple idea of how much it costs to buy property in different parts of Panama. As you can see, it breaks down price ranges and property types for popular cities in the country. We hope this makes it easier to explore your options and understand the market.
If I rent it out, what extra taxes and fees apply in Panama in 2026?
What tax rate applies to rental income in Panama in 2026?
As of early 2026, rental income from property in Panama is taxed under a progressive individual income tax system with rates of 0% on the first USD 11,000, 15% on income between USD 11,000 and USD 50,000, and 25% on income above USD 50,000.
Landlords in Panama can deduct legitimate expenses from their rental income before calculating taxes, including property repairs and maintenance, administration costs, property management fees, insurance, and depreciation, provided they keep proper invoice documentation.
The realistic effective tax rate range after deductions for typical landlords in Panama is between 5% and 15% of gross rental income, depending on how many expenses you can legitimately document and deduct from your taxable rental earnings.
Foreign property owners in Panama generally pay the same rental income tax rates as residents because Panama uses a territorial tax system, meaning the tax applies based on where the income is generated (Panama) rather than the taxpayer's nationality or residence status.
Do I pay tax on short-term rentals in Panama in 2026?
As of early 2026, short-term rental income in Panama (such as Airbnb) is subject to income tax like long-term rentals, but if your activity resembles a hospitality business with services, you may also need to register for and charge ITBMS (VAT) at the standard 7% rate.
Short-term rental income in Panama is generally taxed under the same progressive income tax rates as long-term rentals, but the key difference is that short-term rentals with hotel-like services may trigger additional business registration requirements and potential ITBMS obligations that do not apply to simple long-term leases.
If you want to optimize your rental strategy, you can read our complete guide on how to buy and rent out in Panama.
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If I sell later, what taxes and fees will I pay in Panama in 2026?
What's the total cost of selling as a % of price in Panama in 2026?
As of early 2026, the total cost of selling a property in Panama typically ranges from 7% to 12% of the sale price, covering agent commission, transfer-related taxes, legal fees, and any outstanding obligations.
The realistic low-to-high percentage range for total selling costs in Panama spans from about 6% if you sell without an agent and minimize professional fees, up to 15% if you have a complex sale with full agent representation, higher taxes, and additional legal requirements.
The specific cost categories that make up this total in Panama include real estate agent commission (typically around 5%), the 2% transfer tax, the 3% advance on capital gains, legal and closing fees (0.5% to 1%), and potentially early mortgage repayment penalties if applicable.
The single largest contributor to selling expenses in Panama is usually the real estate agent commission at around 5% of the sale price, which is why some sellers attempt to sell privately, though this comes with its own challenges in marketing and negotiation.
What capital gains tax applies when selling in Panama in 2026?
As of early 2026, the capital gains tax rate when selling property in Panama is 10% on the actual gain (sale price minus original purchase price and qualifying costs), with a 3% advance payment mechanism applied at the time of sale and credited against the final tax liability.
Exemptions to capital gains tax in Panama may apply in certain situations, such as when there is no actual gain, when specific qualifying conditions are met, or when the property qualifies under particular programs, but you should not assume an exemption applies without confirmation from a qualified lawyer or accountant.
Foreigners do not pay extra taxes or a different capital gains rate when selling property in Panama, as the tax framework is based on the transaction and income source rather than the seller's nationality or residence status.
Capital gain in Panama is calculated as the sale price minus the original purchase price, with adjustments allowed for documented improvement costs, and the calculation is reported through DGI's Formulario 107, which is the official capital gains declaration form for real estate transactions.
We made this infographic to show you how property prices in Panama compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
What sources have we used to write this blog article?
Whether it's in our blog articles or the market analyses included in our property pack about Panama, we always rely on the strongest methodology we can … and we don't throw out numbers at random.
We also aim to be fully transparent, so below we've listed the authoritative sources we used, and explained how we used them and the methods behind our estimates.
| Source | Why It's Authoritative | How We Used It |
|---|---|---|
| PwC Worldwide Tax Summaries (Personal Income) | PwC is a top-tier global tax firm with regularly updated professional references. | We used it to anchor the official income tax brackets for rental income in Panama. We also verified the January 2026 review date to ensure our data is current. |
| PwC Worldwide Tax Summaries (Other Taxes) | It consolidates transfer taxes, capital gains, ITBMS, and property taxes in one place. | We used it to quantify the 2% transfer tax, 3% advance mechanism, and 10% capital gains framework. We also confirmed ITBMS basics and new-build transfer treatment. |
| DGI Panama (Property Tax Portal) | This is Panama's national tax authority, the official source for tax payment procedures. | We used it for practical details like payment installments and the 10% early-payment discount. We used it to make the annual ownership budget realistic. |
| DGI Panama (Formulario 107) | It's an official DGI form page directly tied to real compliance for property sales. | We used it to validate that capital-gains reporting is an actual government workflow. We used it to support the "sell later" section on capital gains steps. |
| Panama Public Registry | The Public Registry records all ownership and liens, essential for buying safely. | We used it to ground the buyer's mandatory costs around registration and title verification. We also used it to explain why lien checks are essential. |
| Panama Equity | It's a long-running Panama real estate firm publishing transparent market data. | We used it to estimate realistic monthly HOA fees per square meter for Panama City condos. We used it to give Panama-specific ranges instead of generic assumptions. |
| ASEP (Electricity Regulator) | ASEP is the official regulator, so its tariff documents are the most direct source. | We used it to explain that electricity costs vary by consumption bands and semester updates. We used it to avoid made-up utility estimates in the owner budget. |
| Naturgy Panama | It's a major regulated electricity distributor explaining how tariffs work. | We used it to confirm that tariffs can be updated semi-annually within a regulated period. We used it to explain why utility bills can change even with stable usage. |
| Global Property Guide | It's a recognized international property research publisher with consistent methodology. | We used it as a cross-check on typical cost buckets for buyers and sellers. We used it to sanity-check our closing-cost ranges against an external benchmark. |
| The Independent Lawyer (Panama) | It's a Panama-focused legal practice explaining market practice clearly. | We used it to explain who usually pays the agent commission and how costs can be negotiated. We used it to inform the "negotiable costs" section. |
| Panama Realtor | It's a long-standing Panama brokerage documenting standard commission practice. | We used it to triangulate the 5% commission norm paid by sellers. We used it to keep buyer budgeting realistic when negotiating who pays what. |
| Banco Nacional de Panamá | Banco Nacional is a major state-owned bank whose guidance reflects real compliance. | We used it as secondary validation that Ley 66 property-tax reforms are operationalized. We used it to support the point that unpaid property tax matters in transactions. |
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