Panama Property Taxes and Closing Costs: What Buyers Pay in 2026
By Gustavo Szuchman, Papaya Holdings · Published · Last updated
Expect to pay about 3–6% on top of the purchase price when you buy property in Panama, and roughly 3–6% of the property value a year to own it. Here is every cost, who pays it, and when.
Summary
| When | What | Typical amount |
|---|---|---|
| Buying | Transfer tax (ITBI) | 2% of the price or the cadastral value, whichever is higher; commonly paid by the seller |
| Advance capital-gains tax | 3% of the price; paid by the seller | |
| Legal fees (your attorney) | $1,500–3,500 | |
| Notary and Public Registry fees | Depend on the price | |
| Optional: corporation (S.A.) setup | $1,500–2,500 | |
| Owning | Property tax | Depends on value and use (see below) |
| HOA / community fees | Depends on the community | |
| Utilities, internet, pool, garden, insurance | Varies | |
| Management (if rented) | Often 15–30% of rental income | |
| Selling | Capital-gains tax | 10% of the gain, with 3% of the price paid in advance |
| Transfer tax | 2%, if you pay it as seller |
Rule of thumb: budget 3–6% above the price to buy (less if the seller pays the transfer and advance taxes, as is common) and about 3–6% of the property value per year to own it, including maintenance.
All figures are general guidance as of 2026, not tax advice. Confirm the current rates and who pays what with your Panamanian attorney.
Costs when you buy
Transfer tax (ITBI): 2%
Charged on the higher of the sale price or the property's registered (cadastral) value. By custom the seller usually pays it, but the contract can say otherwise.
Advance capital-gains tax: 3%
The seller pays an advance of 3% of the price toward their capital-gains tax at closing. It affects you as a buyer only if your contract shifts it to you.
Legal, notary and registry fees
Your attorney's fees ($1,500–3,500 for most residential purchases) cover due diligence, contract review, the deed and registration. Notary and Public Registry fees are added on top and scale with the price.
Buying through a corporation
A Panamanian S.A. costs about $1,500–2,500 to set up, plus annual fees and accounting. It can simplify a future sale (selling shares instead of the property) but adds complexity, and US persons face extra reporting.
Costs of owning
Property tax
Panama's property tax depends on the registered value and on whether the home is your registered primary residence (patrimonio familiar tributario). Under Law 66 of 2017 (as amended), administered by Panama's tax authority, the Dirección General de Ingresos (DGI), the rates are:
| Primary residence | Rate |
|---|---|
| Up to $120,000 | Exempt |
| $120,000–700,000 | 0.5% |
| Over $700,000 | 0.7% |
| Other properties (e.g. second homes, rentals, land) | Rate |
|---|---|
| Up to $30,000 | Exempt |
| $30,000–250,000 | 0.6% |
| $250,000–500,000 | 0.8% |
| Over $500,000 | 1% |
New construction may qualify for a temporary exemption on the value of the building. Ask your attorney whether a specific property qualifies.
Running costs
Community (HOA) fees, electricity and water, internet, pest treatment, pool and garden care, insurance and occasional repairs from salt air. 3–6% of the property value per year is a realistic all-in budget for a coastal home, not 1–2%.
Rental costs
If you rent, add property management (often 15–30% of rental income), cleaning, listing fees and income tax on rental income. See rental income in Playa Venao.
Example: buying a $590,000 home
| Item | Estimate |
|---|---|
| Transfer tax 2% (if you pay it) | $11,800 |
| Legal fees | ~$3,000 |
| Notary and registry | ~$1,000–2,000 |
| Total if the buyer pays the transfer tax | ~$16,000–17,000 (about 2.8%) |
| Total if the seller pays it | ~$4,000–5,000 (under 1%) |
Illustrative only; your attorney will give you the exact figures for your contract.
Frequently asked questions
How much are closing costs when buying property in Panama?
For the buyer, typically 1–3% for legal, notary and registry fees, rising toward 3–6% if the buyer also pays the 2% transfer tax and other charges. Budget 3–6% to be safe.
Who pays the transfer tax in Panama?
By custom the seller pays the 2% transfer tax and the 3% advance capital-gains tax, but the contract can assign them differently.
How much is property tax in Panama?
It depends on value and use. A registered primary residence is exempt up to $120,000 and pays 0.5–0.7% above that; other properties pay 0.6–1% above $30,000 (Law 66 of 2017, as amended).
Is there capital-gains tax on property in Panama?
Yes, 10% of the gain, with 3% of the sale price paid in advance at closing. Your attorney can calculate whether you are due a refund or owe more.
Are there annual costs to own land in Panama?
Yes, but they are modest: property tax above the exempt threshold, plus basic maintenance and security.
Continue reading
- Chapter 1The Playa Venao + Playa Raya Buyer's GuideHow foreigners buy property in Playa Venao and Playa Raya: titled land vs ROP, the steps, taxes and costs, red flags and realistic yields. 2026 edition.
- Chapter 2Turnkey vs Pre-Construction vs Land in Panama: Which Is Right for You?Turnkey home, pre-construction villa or land in Panama? Honest comparison of cost, risk, timeline and which option fits which buyer in Playa Venao.
- Chapter 3The Pre-Purchase Checklist for Playa Venao + Playa Raya Real EstateA 27-point checklist for buying property in Panama: title, location, permits, money and contracts. Work through it before you sign in Playa Venao.
- Chapter 4Panama Pre-Construction Risk: What Buyers Need to Verify Before SigningBuying pre-construction in Panama? The risks that matter, how often projects stall, and a 7-point verification checklist to use before you sign.
- Chapter 5Can Foreigners Own Property in Panama? Rules & Verification StepsHow foreigners can legally own property in Panama: titled land vs Right of Possession, the Public Registry, the buying steps and the mistakes to avoid.
- Chapter 6How to Buy Property in Panama as a Foreigner (2026 Guide)Step-by-step: how a foreigner buys property in Panama in 2026. Reservation, due diligence, promesa de compraventa, deed, costs and timeline.
