Pay little to no Real Estate Taxes!!

http://www.opendoorspanama.com/convertible-house-pedasi/

If saving money on taxes is your cup of tea, then you should consider buying property in Panama. The government as of January 1, 2019 will begin to implement a new property tax system in order to stabilize the “wild west” approach that currently exists when it comes to property tax collection and titling of lands. Currently many land owners own untitled land making it impossible to tax. So instead of trying to “convince” people to title their land the new law will exempt all properties and land valued at below $120,000 (up from $30,000) from paying any taxes. This will affect the majority of homes and land throughout the country as most fall under this category. This is the beginning step of what the government of Panama hopes will begin to modernize their Real Estate transaction process and also allow it to collect taxes in real time, rather than waiting until homes and land are sold to collect any property taxes.
The new law has some dramatic savings available to property owners. Currently, you can be taxed up to 2.1% if your home has a high enough value. This will be reduced to just .7% if your home is worth over $700,000.
Below is a breakdown of how the new tax law will look for both Primary residences and also Secondary and Commercial residences.
For Primary owners:
100% exempt up to $120,000, so no tax due if your home/land falls into this category. This is the majority of property in Panama.
$120,001 – $700,000 will have a 0.5% tax rate
$700,000 will have a 0.7% tax rate
Here’s how this would work on a real world example:
Your home is worth $250,000, therefore $120,000 of that is exempt from taxes. You would pay 0.5% tax rate on $130,000 which is only $650 per year!
For Secondary, Commercial and Industrial Properties:
$0 – $30,000 will be exempt from taxes
$30,001 – $250,000 will have a 0.6% tax rate
$250,001 – $500,000 will have a 0.8% tax rate
$500,000 and above will have a 1.0% tax rate
The other known aspect to this law that homeowners can take advantage of now will pertain to those who may currently have unpaid property taxes. For those who may fall into this category, all fines and any interest owed on these taxes will be waived if you pay by December 31, 2017. This is eligible to any unpaid tax through August 31, 2017.
In conclusion, with these larger tax deductions and lower rates, it makes even more financial sense to purchase property in Panama. The rationale behind this law make sense to help the country have a more straight forward approach to tax collection and in the long run help eliminate the grey area of non-titled properties. As always, please consult with an accountant for all tax issues and concerns when purchasing. We will update you with any new information as it comes available in the coming months. Buenos Dias!!