Update on Property Taxes in Panama
We’ve already seen it happening in Punta Pacifica and Paitilla, with future plans to canvass the entire downtown Panama City corridor and then move into the interior. The tax man cometh! As the Martinelli administration continues to spend money on infrastructure projects, the government must continue looking for ways to fund these projects, and property tax increases are being enacted in many cases without the property owners ever being notified.
In other words, your tax rate may have been adjusted already, and there’s no way to dispute it if you dont act within a certain window of time.
The good news is, we’ve identified a legal loop-hole to either freeze the property values which those taxes are based on and/or dispute the new value, but the key is acting either before your property gets reassessed or within two weeks of the property appearing on the public notice of reassessment or “Lista de Revalorizacion Catastral.”
Regardless of whether your property is exempted from property taxes, when it comes time to sell, you will have to pay the transfer tax/capital gain tax lump sum of 5% based on the registered value of the property. That said, many property owners are taking advantage of keeping an old, non-updated property value as a basis for their taxes. For someone that owns in a building that’s more than 20 years old, their place may be worth $500,000, but if it’s registered at only $90,000, then they are paying taxes based on that old value. This is important even for owners of properties that still have the property tax exoneration, in that when it comes time to sell or when the exoneration expires, they want to make sure that their tax basis is a low as possible.
Certain areas and certain buildings are being targeted for reassessments and the only way to know if your property’s been reassessed is to keep an eye on the local newspapers on a daily basis or hire a firm that will do that for you.
We’ve started working with a firm and that has an alert service set up to automatically notify property owners once their property appears on Catastro’s list. They have also been able to help our jubilado clients FREEZE the value of their property to avoid any future tax increases, even if the property gets reassessed.
If you’re interested in working with them, please contact us!