Buying Property in Panama as a Foreigner: Legal and Tax Guide 2026 (Taxes, ITBI, and Exemptions)

One of the first questions we get from people considering buying in Panama is simple but layered with nuance: "Can I buy property as a foreigner, and how much will it actually cost me in taxes?" The good news is that Panama allows foreigners to buy property with exactly the same rights as Panamanians (with the sole exception of certain coastal and island zones restricted for national security reasons).

The part that does require explanation is everything related to taxes, and July 2026 has brought important changes worth understanding before signing any promise-to-purchase agreement.

Can a foreigner buy property in Panama?

Yes, with no significant restrictions. Unlike other countries in the region, Panama doesn't require residency, a visa, or citizenship to purchase real estate as an individual.

The buying process signing a promise-to-purchase agreement, due diligence, a public deed before a notary, and registration with the Public Registry is the same for nationals and foreigners alike. That said, understanding the tax burden tied to that purchase is where many first-time buyers get surprised, sometimes pleasantly, sometimes not.

Recent change: ITBI exemption for new housing

On July 30, 2026, Panama's Council of Ministers approved a bill that eliminates the Real Estate Transfer Tax (ITBI) on the first sale of new homes valued up to $120,000. The proposal, presented by the Ministry of Economy and Finance alongside the Ministry of Housing and Land Planning (Miviot), adds an article to Law 106 of 1974 and amends Law 4 of 1994.

Here's how the structure would work if the National Assembly approves the initiative as presented:

New homes valued up to $120,000 would be fully exempt from ITBI (compared to the current general rate of 2%).

For higher-value properties, the exemption still covers the first $120,000, and the tax is calculated only on the excess using a progressive scale: 0.5% between $120,001 and $130,000; 1% up to $150,000; 1.4% up to $170,000; 1.6% up to $190,000; and 1.8% between $190,001 and $200,000. Homes priced above $200,000 aren't covered by this preferential scale and fall under the general tax regime.

An important detail for buyers: the law establishes that the seller is responsible for paying the ITBI, and it voids any agreement that shifts that obligation, directly or indirectly, to the buyer.

To qualify, the first sale must be finalized within two years of the occupancy permit being issued. This benefit partially reverses what was established under Law 468 of 2025, which had eliminated the previous exemption and drew criticism from the construction sector for raising project costs.

The proposal still needs to pass through the National Assembly, which may amend it before final approval, so it's worth following its progress if you're planning a purchase in the coming months.

Annual property tax: lower than you'd expect

Beyond the transfer tax (a one-time payment), every property owner in Panama pays an annual property tax (Impuesto de Inmueble) calculated on the registered cadastral value. This is where Panama's system becomes particularly attractive compared to countries like the United States.

If you register the property as your primary residence (Family Patrimony / Primary Residence):

The first $120,000 of value is fully exempt. Between $120,001 and $700,000, a 0.5% rate applies. Above $700,000, the rate rises to 0.7%. A primary residence valued at $300,000, for example, would pay approximately $900 per year ($75 per month): zero on the first $120,000 and 0.5% on the remaining $180,000.

If the property is an investment or second home:

The first $30,000 is exempt. Between $30,001 and $250,000, a 0.6% rate applies. Between $250,001 and $500,000, it's 0.8%. Above $500,000, the maximum rate is 1%.

To put this in perspective: a primary residence worth $300,000 in Panama pays around $900 annually, compared to roughly $2,550 for an equivalent property in Florida (one of the lowest-tax jurisdictions in the United States). The gap widens further on higher-value properties.

The "frozen base": the benefit few people know about

This is probably the point that surprises foreign buyers the most. In Panama, the value used to calculate your property tax is locked in at the time of purchase and doesn't automatically adjust as the market appreciates. It only updates when the property is sold again and a new transaction is registered.

In practice, this means that if you buy an apartment today for $250,000 and it's worth $450,000 ten years from now thanks to the area's appreciation, your tax bill is still calculated on the original $250,000. This is a significant advantage compared to systems like the U.S., where most states periodically reassess properties and tax bills rise along with the market.

Registering your Family Patrimony (Patrimonio Familiar Tributario)

To access the preferential primary-residence rate, you need to formally register the property as Patrimonio Familiar Tributario or Vivienda Principal with Panama's Directorate General of Revenue (DGI).

Typical requirements include a copy of the owner's ID or passport, a certified copy of the property title from the Public Registry, a notarized sworn statement of primary residence, and the corresponding DGI form.

You can only designate one property under this category, and once approved, the designation is permanent as long as it remains your primary residence.

Other closing costs and taxes to consider

Beyond the ITBI and the annual property tax, there are other items that are part of a real estate transaction in Panama: the Stamp Tax, equal to 0.1% of the registered value and paid by the buyer; the capital gains tax, paid by the seller at a rate of 3% of the sale price as an advance withholding (or 10% on the actual net profit, whichever results in a lower bill); and, if you plan to rent out the property, the rental income tax, which is progressive and ranges from 5.83% to 20.38%.

It's also worth remembering that many new construction projects come with additional property tax exemptions, ranging from 3 to 20 years, granted under Law 66 of 2017 and its amendments. These exemptions are tied to the property itself (not the owner), so they transfer to you if you buy a unit that still has years of exemption remaining.

Our recommendation

No article replaces the advice of a Panamanian real estate attorney, and in a market updating its tax framework the way Panama is in 2026, confirming the rules in effect at the time of your specific purchase is essential. But understanding this general structure gives you a solid foundation to negotiate with real information and anticipate the total cost of your investment, not just the sticker price.

Looking for more clarity before you buy?

At Reside Panama, we closely track the regulatory changes affecting expats, so you can make informed decisions. Check out our guides on residency visas and opening a bank account to complete your purchase process with confidence.