Panama is dubbed as one of the Caribbean’s pure and well-established tax havens because of its extensive legislation that closely regulates the financial services and offshore jurisdiction of the country. The new property tax Panama is yet another proof of this as it removes a burden from the shoulders of many taxpayers, specifically property owners. Here is a quick rundown of the latest property tax Panama.
TFP or Tributary Family Patrimony Defined
Tributary Family Patrimony, according to the Family Legal Code of Panama, is defined as a real estate property meant for family habitational use on a permanent basis by the owner.
Primary Residence Defined
Primary Residency is defined as a real estate property meant for residential habitational use on a permanent basis by the owner, whether this owner is a juridical person or a natural person, and the said property doesn’t constitute a TFP or Tributary Family Patrimony.
It may also constitute Tributary Patrimony Tributary or Primary Residence, the primary residence of the owner who is a retiree, pensioner, or who is of legal retirement age.
New Property Tax Panama for Primary Residences
Law 66 provides property owners with benefits if the specific property serves as their primary residence in Panama. Even though the law distinguishes between the primary residence of a single person and a family, this benefit is applicable to both a single person and a family if the property serves as their place of primary residence. A family’s primary residence includes those married couples that have children and those that don’t as well as single parents.
The benefit offers a complete tax exemption for the initial $120,000.00 of the property’s registered value including the building construction and land.
Article 766 of Fiscal Code states the new Combined Progressive Tax rates for primary residences as follows:
- Properties with a value ranging from $0 to $120,000 are tax exempted.
- If a property registered value exceeds $120,000, the surplus of $120,000 and up to $700,000 will get a tax rate of 0.5%.
- if a property registered value exceeds $700,000, the surplus of $700,000 will get a tax rate of 0.7%.
New Tax for Secondary Residences, Industrial, and Commercial Properties in Panama
The tax rates for the secondary residences as well as industrial and commercial properties in Panama are also changing. However, these tax breaks might be a bit less generous.
- Properties with a value ranging from $0 to $30,000 are tax exempted.
- Properties with a value ranging from $30,001 to $250,000 will get a tax rate of 0.6%.
- Properties with a value ranging from $250,001 to $500,000 will get a tax rate of 0.8%.
- Properties with a value of more than $500,000 will get a tax rate of 1.0%.
If there is a 20-year tax exemption that has already been applied on your property as per the previous law, you don’t need to declare the property as your Tributary Family Patrimony. You will risk losing the current tax exemption if you declare the property under this new property tax scheme in Panama. But once the tax exemption expires, you need to declare your property under the new scheme of property tax Panama.
Don’t waste time! Contact your accountant and consider submitting your applications to enjoy all these new rates.
