There is a property tax exemption in Panama that has nothing to do the Pensionado program or any type of visa.
The property tax exemption was started by the government of Panama to attract the international market to buy real estate, locate here, spend money, and to employ more Panamanians, and it’s working. Initially, the property tax exemption was given to a building (including condos) or a house at a certain time of construction. Initially they started out with a 20-year exemption on certain properties. Since that time, they’re no longer doing 20-year exemptions; they’re doing 10-year exemptions.
With that being said, if your building qualified for the 20-year property tax exemption, the person who buys that apartment would be able to then register that exemption and not pay property tax for the number of years left on the exemption. So right now, there are no buildings with twenty years remaining on the exemption, but there are buildings that would have, for example, around 18 years or so, depending on when the building was completed.
The property tax exemption is on the building itself and not the land underneath. So, for instance, you buy a property and it’s going to be property tax free for 15 years. You will owe the undivided portion of the land tax underneath your condo building, which could be from $200 to $400 depending on how many units there are over how much land.
In this example, the $200 - $400 is a one-time annual fee or annual tax that you would pay. This is one of the prime motivating factors for people to move to Panama buy real estate. For example, in Dallas, I paid off my house, but my property tax was $11,997 a year. That’s a lot of money for paid up house. And it’s not inconceivable that you buy a condo in Panama and you don’t pay property tax for the next 8 or 10 years. That’s a long time not paying property tax. This tax is not deferred that you owe it later. There is just no property tax for duration of time.
The exemption is fully transferrable and it stays with that property. However, the owner still needs to re-apply for the exemption when the property changes hands. Probably half of the people that buy never actually file for the exemption and they only find out when they go to sell the property that they could have claimed it. So just because the building has the exemption on it, doesn’t mean you get it unless you file the paperwork with your attorney.
(Home with pool and terrace overlooking the ocean, Coronado, Panama, pictured.)