Countries › Panama › Guide › 11. Real estate and land › Selling property in Panama: 10 percent tax on the gain, the 3 percent advance that can be final, and the scale for developers

Selling property in Panama: 10 percent tax on the gain, the 3 percent advance that can be final, and the scale for developers

Argentina. For full detail on Argentina, go to The Argentine Thread.

Last verified: 2026-10-29 · Status: Stable

An individual or company that sells real estate outside its ordinary business pays income tax of 10 percent on the gain, and must pay 3 percent of the higher of price and cadastral value as an advance before the deed is registered. The seller may keep the 3 percent as the final tax or file a sworn return to recover the excess as cash or a transferable tax credit. Developers pay a separate scale on first sales of new homes (0.5 to 2.5 percent) and new commercial premises (4.5 percent).

Panama's currency, the balboa (B/.), is at par with the US dollar, which circulates as legal tender; the Superintendencia de Bancos states that the balboa's value is on a par with the US dollar (checked 29 October 2026). USD figures therefore equal the balboa figures.

Key facts

Income tax on gains from real estate sold outside the ordinary business	10 %Código Fiscal art. 701 literal a, as of 2026-10-29 · in force
Income tax advance on a non business real estate sale	3 %Código Fiscal art. 701 literal a, as of 2026-10-29 · in force
Income tax on a developer's first sale of new commercial premises	4.5 %Código Fiscal art. 701 literal a, as of 2026-10-29 · in force
Exchange rate used for USD conversions	1 PAB per USDBalboa at par with the US dollar (Superintendencia de Bancos), as of 2026-10-29 · in force

The rule

1. For gains on the sale of real estate, the taxable income is the difference between the real sale value and the basic cost of the property plus the expenses needed to carry out the transaction.Código Fiscal art. 701 literal a as worded by Ley 208 de 2021 art. 7, art. 701 literal a first paragraph, 2021-04-06 official text · verified 2026-10-29

2. If the sale is outside the seller's ordinary business, income tax is 10 percent of the taxable gain. The seller either files a sworn return with the DGI liquidating the gain, with supporting documents, and pays 10 percent, or pays 3 percent of the higher of sale value and cadastral value in advance. The seller may treat the 3 percent as the final income tax. If the 3 percent exceeds 10 percent of the gain, the seller may file a sworn return and receive the excess in cash or as a tax credit usable against DGI taxes and transferable to other taxpayers.
Cost to do it: 3 percent of the higher of price and cadastral value, or 10 percent of the gain if lower and claimed.
Example: Sale at B/.300,000 with a B/.15,000 gain: advance B/.9,000, final tax B/.1,500, refund or credit B/.7,500. / US$300,000 sale, US$9,000 advance, US$1,500 final tax.Código Fiscal art. 701 literal a as worded by Ley 208 de 2021 art. 7, art. 701 literal a, 2021-04-06 official text · verified 2026-10-29

3. In these non business sales the sale is excluded from the seller's other taxable income, and transfer taxes and transfer costs are not deductible; the basic cost of the property is the lower of its cadastral value and its book value.Código Fiscal art. 701 literal a as worded by Ley 208 de 2021 art. 7, art. 701 literal a, 2021-04-06 official text · verified 2026-10-29

4. Real estate used in farming, certified by the Ministry of Agricultural Development, and rural homes with a cadastral value up to B/.10,000 pay a single final 3 percent tax on the gain from the transfer, paid before registration together with the 2 percent transfer tax.Código Fiscal art. 701 literal a parágrafo as worded by Ley 208 de 2021 art. 7, art. 701 literal a parágrafo, 2021-04-06 official text · verified 2026-10-29

5. If selling real estate is within the seller's ordinary business, the first sale of new homes and new commercial premises (construction permits from 1 January 2010) is taxed on the higher of sale value and cadastral value at 0.5 percent for homes up to B/.35,000, 1.5 percent above B/.35,000 up to B/.80,000 and 2.5 percent above B/.80,000, and 4.5 percent for new commercial premises; the tax is paid before registration and replaces the monthly 1 percent advance and estimated tax. Sales of homes or premises that are not new follow the general income tax rates of arts. 699 or 700.
Example: A developer's first sale of a new B/.500,000 shop: 4.5 percent, B/.22,500. / US$500,000 new shop, US$22,500.Código Fiscal art. 701 literal a as worded by Ley 208 de 2021 art. 7, art. 701 literal a second to sixth paragraphs, 2021-04-06 official text · verified 2026-10-29

6. The seller files DGI form 107 (capital gain) together with form 106 (transfer tax) and pays at DGI cashiers, collecting banks or online once approved.Dirección General de Ingresos, real estate frequently asked questions, questions 3, 4 and 7, 2026-10-29 official text · verified 2026-10-29

Worked example

Case 1: an investor sells a house for B/.300,000 (US$300,000). Book value is B/.280,000 and cadastral value B/.290,000, so the basic cost is B/.280,000; transaction costs are B/.5,000. Gain B/.15,000, tax at 10 percent B/.1,500; the 3 percent advance of B/.9,000 exceeds it, so the investor files a sworn return and recovers B/.7,500 in cash or as a transferable credit.
Case 2: the same house with a basic cost of B/.150,000 and B/.10,000 of costs gives a B/.140,000 gain and B/.14,000 of tax at 10 percent; the investor keeps the B/.9,000 advance as the final tax.

Step by step

Work out the basic cost as the lower of cadastral value and book value, and gather proof of transaction costs.
Compare 10 percent of the gain with 3 percent of the higher of price and cadastral value.
Pay the 3 percent advance and the 2 percent transfer tax through forms 107 and 106 before the deed is registered.
If 10 percent of the gain is lower, file the sworn return and choose a cash refund or a tax credit.

Common traps

The basic cost is the lower of cadastral and book value, which can shrink the deductible cost on old properties.
Transfer tax and transfer costs cannot be deducted in a non business sale.
Sellers who buy and sell property habitually may be treated as in the business, which changes the regime.
Panama has no tax treaty with Argentina, so an Argentine resident seller should check Argentine taxation of the same gain in The Argentine Thread guide.

Sources

← Real estate transfer tax in Panama: 2 percent paid by the seller, and the 2026 relief for the first sale of new homesLeases in Panama: freedom of contract for commercial and most residential leases since 1995, the written contract, the one month deposit held by the Ministry of Housing, and the legacy protections of Ley 93 de 1973 →

Get rule changes weekly

Free. One email a week from The LatAm Thread.

One more step after you press the button: we take you to Substack, where your email is already filled in. Confirm there to start. No spam, unsubscribe anytime, we never share your address. By subscribing you agree to the privacy policy.