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New Panama Real Estate Law
The new Panama Real Estate Law
The Facts About New Panama Property Tax Law
A lot of confusion has been created by the implementation of the new property tax structure in Panama, which goes into effect this month. I asked our legal advisor to analyze the law and how it might impact our clients. It may be confusing, but the new law is likely to save many of our clients thousands of dollars a year.
He researched the law and discussed the details with colleagues, accountants, and tax experts to gain a clearer picture of the impact. It was still difficult to get specific answers from the tax office, which means there is still some room for interpretation of specific items in the law. But here is his opinion of the new property tax law:
This new law basically implements three (3) new fundamental property tax schemes:
- The increase of the tax exemption from $30,000 up to $120,000 for properties declared as Familiar (homestead) Patrimony. In other words, properties under $120,000 registered value will be property tax exempt (new properties are exemted during 10 years). There won’t be any more “land or improvement tax,” but if you have an exemption, your property tax will remain the same.
- The law dramatically reduces the property tax percentage. Before it was up to 2.1 percent (land and improvements combined). From now on, properties with values from $120,000 to $700,000 will pay a total of 0.5 percent over the difference between $120K-$700K. Then, from $700K and up, the property tax applicable will be 0.7 percent.
- As an owner, you are obligated to declare your property (only one property) as your “Familiar Patrimony” in order to have the new property tax scheme applied to your property, in accordance with the items above.