Last updated: April 23, 2026
Property tax is one of the most underestimated recurring costs for property buyers in Panama, especially foreign investors and second-home buyers. It is governed by Law 66 of 2017, which deeply reformed the real estate tax regime and created the Family Tax Patrimony (PFT) concept, a preferential bracket for primary residences.
This guide explains what the tax is, how it is calculated under the two current regimes (PFT and Investment), what exemptions exist, and how the amount varies by zone and property type. It includes three real numerical examples: an apartment in Punta Pacifica, one in Costa del Este, and one in Obarrio, so you can project your annual cost before signing.
If you buy to rent, after reading this run your net yield with the profitability calculator, which includes this tax in deductible expenses. And if it is your first home, verify mortgage subsidy eligibility with the Preferential Interest Law calculator.
(a) What Is the Property Tax?
Property tax is an annual levy on real estate ownership in Panamanian territory. It is governed by the Tax Code and Law 66 of 2017, administered by the Tax Authority (DGI) of the Ministry of Economy and Finance.
Key features:
- Annual — paid every year while you remain the owner.
- On the property, not on rental income.
- Three installments per year (April, August, December), or one in April with a 10% discount.
- Paid by the registered owner, natural or legal person, Panamanian or foreign, resident or non-resident.
- Applied per property, not per person — three apartments mean three independent tax filings.
Default triggers an immediate 10% surcharge plus 1% monthly interest. Over time, the DGI can register a lien on the property that prevents sale until the tax debt is paid.
(b) Tax Base: Cadastral Value, Not Market Price
This is the most misunderstood concept of Panama's property tax.
The taxable base is the cadastral value registered with the DGI, not the market price. The cadastral value comprises:
- Land value (proportional in horizontal property apartments).
- Improvement value (construction, works).
In apartments, the cadastral value is usually between 40% and 70% of commercial value, with significant variation by zone, property age, and DGI updates. An apartment selling today for $500,000 may have a cadastral value of $300,000 if the appraisal is from 2010 and was not updated at purchase.
When the cadastral value is set or updated:
- Purchase with registered deed: cadastral value updates automatically to the price declared in the public deed filed at the Public Registry.
- Declared improvements: if you add construction or renovate and request a building permit, the DGI updates the cadaster.
- DGI-driven reappraisal: the DGI may reappraise if it detects significant under-declaration in a zone.
- Owner request: you can request a downward reappraisal if the market dropped (long process, infrequent).
Practical implication: if you buy a used property for $500,000 and the deed registers at $500,000, your cadastral value becomes $500,000 from that moment. Trying to register a lower value than the actual price to pay less tax is a tax crime.
(c) PFT Schedule — Family Tax Patrimony (Primary Residence)
Law 66 of 2017 created the Family Tax Patrimony (PFT) regime to protect the primary residence with a low preferential rate:
| Cadastral value bracket | PFT rate |
|---|---|
| $0 – $120,000 | 0% (exempt) |
| $120,001 – $700,000 | 0.5% annually |
| Over $700,000 | 0.7% annually |
Requirements to qualify for PFT:
- The property must be the owner's primary residence.
- The owner must be a natural person (not a corporation).
- File the request with the DGI with ID/passport, title, and specific form.
- Only one property per family unit can be under PFT.
The benefit is not automatic: even if the property is your home, if you don't file the request, the DGI applies the Investment schedule by default. Many owners lose years of savings by failing to register PFT at purchase time.
(d) Investment Schedule — Second Home, Rental, or Commercial
If the property is not the primary residence, belongs to a corporation, or you already have another property under PFT, the alternate Investment schedule applies:
| Cadastral value bracket | Investment rate |
|---|---|
| $0 – $30,000 | 0% (exempt) |
| $30,001 – $250,000 | 0.6% annually |
| $250,001 – $500,000 | 0.8% annually |
| Over $500,000 | 1.0% annually |
This schedule applies by default to:
- Long-term rental apartments.
- Second residences and beach homes (unless specific exemption).
- Commercial properties and offices.
- Properties registered to a corporation.
- Owners with multiple properties (only one can use PFT).
Note on bracket application: like PFT, the Investment schedule is applied progressively. Each bracket is taxed at its rate and amounts are added. It is not a marginal rate that applies to the entire value.
(e) Exemptions — Beyond PFT
New construction exemption (Law 3 of 1985 and amendments)
Panama has historically used property tax exemption as an incentive for housing construction. Current exemptions on new construction:
- New homes with cadastral value up to $120,000: exempt for 20 years from occupancy permit date.
- New homes with cadastral value between $120,001 and $300,000: exempt for 5 years.
- New homes with cadastral value above $300,000: exempt for 3 years.
Critical: the exemption is for 20 years from the building's occupancy permit, not from your purchase. If you buy a used apartment in a building with a 2015 occupancy permit, the exemption already consumed 11 years — you have 9 years remaining of the original 20 (if applicable).
Law 468 of 2025 — Mortgage Subsidy, NOT Exemption
A frequent confusion: Law 468 of 2025 grants up to a 5% subsidy on first-home mortgage rates with prices up to $120,000. It is a subsidy on the mortgage rate, not on property tax. The first-home tax exemption comes from PFT (first $120,000 exempt) and from Law 3 of 1985 for new construction.
If you want to fully understand Law 468, see our Law 468 preferential interest guide and estimate your subsidy with the calculator.
Social interest projects
The Housing and Land Use Ministry (MIVIOT) can declare social interest projects with property tax exemption up to 20 years. These projects are typically affordable housing in West Panama, Colon, or provinces. They do not apply to premium towers in Panama City.
(f) Three Real Numerical Examples
We apply the schedules to three typical Panamanian market cases. Assumption: cadastral value equal to market price (conservative scenario — in practice usually lower).
Example 1 — Punta Pacifica Apartment, $800,000 (Primary Residence PFT)
A foreigner buys an apartment in Punta Pacifica for $800,000 and declares it primary residence under PFT.
PFT bracket calculation:
- $0 – $120,000: exempt = $0
- $120,001 – $700,000 ($580,000 taxed at 0.5%): $2,900
- $700,001 – $800,000 ($100,000 taxed at 0.7%): $700
Total PFT annual tax: $3,600 (equivalent to $300/month).
If they don't register PFT and end up under Investment:
- $0 – $30,000: exempt = $0
- $30,001 – $250,000 ($220,000 at 0.6%): $1,320
- $250,001 – $500,000 ($250,000 at 0.8%): $2,000
- $500,001 – $800,000 ($300,000 at 1%): $3,000
Total Investment annual tax: $6,320.
Annual savings from registering PFT: $2,720 — nearly the cost of the (essentially free) PFT registration recovered in the first year.
Example 2 — Costa del Este Apartment, $450,000 (Investment / Rental)
Investor buys an apartment in Costa del Este for $450,000 to rent long-term. Investment schedule applies.
Bracket calculation:
- $0 – $30,000: exempt = $0
- $30,001 – $250,000 ($220,000 at 0.6%): $1,320
- $250,001 – $450,000 ($200,000 at 0.8%): $1,600
Total annual tax: $2,920 ($243/month).
On estimated gross rent of $2,200/month ($26,400/year) in Costa del Este, the property tax represents 11% of annual gross rental income. This cost must be subtracted when calculating net yield — that's why the profitability calculator includes it in detail.
Example 3 — Obarrio Apartment, $250,000 (Primary Residence PFT)
A Panamanian buyer purchases an apartment in Obarrio for $250,000 as a primary residence under PFT.
PFT bracket calculation:
- $0 – $120,000: exempt = $0
- $120,001 – $250,000 ($130,000 at 0.5%): $650
Total PFT annual tax: $650 ($54/month).
Under Investment instead:
- $30,001 – $250,000 ($220,000 at 0.6%): $1,320.
Annual PFT savings: $670. Over 30 years of ownership, properly registered PFT saves more than $20,000 on this property.
(g) Payments — Calendar and Discounts
The tax has a tri-annual schedule:
- April 30 — first installment.
- August 31 — second installment.
- December 31 — third installment.
Lump-sum alternative with discount:
- Full annual payment before April 30 = 10% discount.
On an annual tax of $3,600, the early-payment discount equals $360. On second-home taxes for large investors (over $10,000/year), the discount offsets the opportunity cost of the prepaid money.
Payment channels:
- Online: DGI's e-Tax 2.0 platform (dgi.mef.gob.pa) with tax credentials.
- Authorized banks: Banco Nacional de Panama, Caja de Ahorros, Banco General, Banistmo, and several others.
- DGI offices: in Panama City and provinces.
Real estate firms and building managers often offer to pay the tax on behalf of absent foreign owners — always verify the official receipt.
(h) What to Verify When Buying
Before signing the deed, the buyer's attorney must deliver:
- Property tax clearance issued by the DGI — confirms no outstanding debt on the property.
- Current cadastral value — to project your annual cost.
- Applicable exemptions history — if the building has an active Law 3 new-construction exemption, how much remains.
- Current PFT or Investment regime — if the seller had PFT, the new buyer must register it again if eligible (it does not transfer).
Buying a property with tax debt means you inherit the debt with the property. The DGI does not exempt you — if the seller owed $5,000, you discover it the first year you try to pay and the accumulated debt appears.
(i) How to Project Your Tax Before Buying
Steps to estimate your annual tax before signing:
- Determine the regime — Primary residence (PFT) or Investment?
- Get the current cadastral value (request from the seller's attorney or query the DGI by finca/folio).
- Apply the corresponding bracket schedule — not the maximum bracket on the entire value.
- Verify current exemptions — building age, social interest zone, prior PFT.
- Add this cost to your annual budget along with HOA, insurance, maintenance, and rental income tax (if applicable).
If you buy to rent, property tax is one of the deductible expenses from gross rental income when calculating the income tax base. See detail in Panama rental profitability 2026.
To estimate the specific apartment's market value (and therefore approximate cadastral base if buying today) use PanamaEstimate. For full inventory, browse apartments for sale in Panama.
Common Mistakes
- Assuming PFT applies automatically. It does not — you must apply to the DGI with a specific form.
- Under-declaring the deed price to pay less tax. It is a tax crime. Plus the buyer loses base for future capital gains tax at sale.
- Forgetting the tax when calculating net yield. In Costa del Este it can represent 11% of annual gross rent.
- Not requesting tax clearance at purchase. You inherit the seller's debt.
- Confusing Law 468 with property tax exemption. Law 468 subsidizes the mortgage rate, not the tax.
- Assuming a corporation protects you. Corporate-owned properties always pay under Investment — they don't qualify for PFT. If you buy to live, personal name typically pays less annual tax than a corporation.
Sources
- Law 66 of 2017 — Modification of the Property Tax regime (Official Gazette 28397-A).
- Panama Tax Code — Book Four, Title II (Property Taxes).
- Tax Authority (DGI), Ministry of Economy and Finance — 2026 Property Tax Guide.
- Law 3 of 1985 — New construction exemptions.
- Law 468 of 2025 — Preferential interest for first homes.
- Kraemer & Kraemer — Panama 2026 real estate tax guide.
- RSM Panama — Real estate sector tax outlook (2025).
Want to project the annual tax of a specific property before buying? We help you obtain cadastral value, apply the schedules, and detect current exemptions. Ask Alma and we'll do the calculation at no cost.