Thread: Tax on house in Panama

Good day!

How will the tax duty for an older house be?
- F. ex a house built in 1973 with a probably a given value (of construction) at that time of 12-13.000
- Sold in around 2006-2008 for maybe amounts like 150-180.000
- Left empty for like over a year and nature has had its way with it.
- Real value is considerably decreased and extensive refurbishment is needed.

Thanks in advance for helpful responds.

Originally Posted by Thomasjefferson

How will the tax duty for an older house be?
- F. ex a house built in 1973 with a probably a given value (of construction) at that time of 12-13.000
- Sold in around 2006-2008 for maybe amounts like 150-180.000
- Left empty for like over a year and nature has had its way with it.
- Real value is considerably decreased and extensive refurbishment is needed.

Hi again.

Here is a better elaboration of the options as I see them:
I am wondering what base will be used to charge taxes pr. year for an old house from 1973 in Panama

A: Value of the price of the construction in 73 + inflation: USD 29.190
(I calculated that from 1980-2010 the average increase in consumer prices is 2.27%.
If I use that average the USD 12.400 in 1973 will make a value of USD 29.190 in 2011. I use the average of the index from 1980 Panama Inflation rate (consumer prices) - Economy in lack of something better to use)

B: Value of the last sales price (Probably somewhere around 150-180.000)

C: Value of the sale of the ruin and lot. For example USD 60-80.000

Anybody got some tax related input on this?

Originally Posted by Thomasjefferson

I am wondering what base will be used to charge taxes pr. year for an old house from 1973 in Panama

.............

Anybody got some tax related input on this?

Hi all
I also would like to know this.

I know when you build a house you cab use a certified person or so to just set a value on the house.
I mean, -who knows how much the actual price of a finished house is if you have a lot, get the materials from here and there. Does some work yourself in addition to hire someone and some others come over to help you for free...
Basically you can set whatever number you "want".

But for a old house that is sold for a higher price earlier and then a lower price to you I would like to know myself.
Hope someone can contribute some information on the matter.

Originally Posted by Thomasjefferson

Hi again.

Here is a better elaboration of the options as I see them:
I am wondering what base will be used to charge taxes pr. year for an old house from 1973 in Panama

A: Value of the price of the construction in 73 + inflation: USD 29.190
(I calculated that from 1980-2010 the average increase in consumer prices is 2.27%.
If I use that average the USD 12.400 in 1973 will make a value of USD 29.190 in 2011. I use the average of the index from 1980 Panama Inflation rate (consumer prices) - Economy in lack of something better to use)

B: Value of the last sales price (Probably somewhere around 150-180.000)

C: Value of the sale of the ruin and lot. For example USD 60-80.000

Anybody got some tax related input on this?

i believe the rate on a house in the 60-80 grand area is either 1.50 or 1.75 % . panama tax rates are very high as compared to north america. any house under 30 g is property tax free and the top rate is 2.1%

Originally Posted by nakedguydb

i believe the rate on a house in the 60-80 grand area is either 1.50 or 1.75 % . panama tax rates are very high as compared to north america. any house under 30 g is property tax free and the top rate is 2.1%

It is obvious you don't own property in Wisconsin. I pay 2% and I'm in a rural area. Cities are higher.

The US averages 1.04 % for property taxes, but I guess that means just about jack shit since they can compensate with sales tax.

I thank to you to share and ask information tax on house in Panama. But i really sorry i did not know what is tax paid on houses in Panama. You consult to a tax lawyer of Panama or real estate agent which belong to Panama.

Originally Posted by nakedguydb

i believe the rate on a house in the 60-80 grand area is either 1.50 or 1.75 % . panama tax rates are very high as compared to north america. any house under 30 g is property tax free and the top rate is 2.1%

Hi all!
Thanks for writing in.

The cost of the tax itself I found on everything-panama
Tax:
Under $30,000: 0 %
$30,001 to $50,000 1.75%,
$50,001 to $75,000 1.95%
over $75,000 2.10%.
See the entire tax information here: Corporate and Personal Tax in Panama

Tax exceptions:
15 years Up to US$ 100,000.00
10 years From US$ 100,000.00 to US$ 250,000.00
5 years Above US$ 250,000.00

From primapanama.blog I get a good example about taxation of a house:
“A caveat: These exemptions only apply to the value which the builder declares for the improvement, NOT to the full value which the buyer pays for the property. For example: if a builder underreports that a condo unit is worth US$70,000, but signs a bill of sale to transfer the unit for US$120,000, property tax would be applicable as follows:
- US$30,000 would be free of taxes because of the minimum threshold for property tax,
- US$40,000 would be free of tax for 15 years (or 20 if the builder registered the improvement before the 2010 deadline).
- US$50,000 would be subject to property tax from the date of the purchase because they are not part of the original value of the improvement.”

Read the entire article here: Clarification of the property tax exemption - Panama Investor Blog

If I understand this correct this should be the scenario on houses with value of USD: 100.000, 250.000, 500.000 and 1.000.000

Value Tax step Tax amount Tax cost
USD 100 000,00
under $30,001 0,00 % USD 30 000,00 USD 0,00
$30,001 to $50,000 1,75 % USD 50 000,00 USD 875,00
$50,001 to $75,000 1,95 % USD 25 000,00 USD 487,50
over $75,000 2,10 % -USD 5 000,00 -USD 105,00
Annual tax amount USD 1 257,50
Calculated tax percentage 1,26 %


Value Tax step Tax amount Tax cost
USD 250 000,00
under $30,001 0,00 % USD 30 000,00 USD 0,00
$30,001 to $50,000 1,75 % USD 50 000,00 USD 875,00
$50,001 to $75,000 1,95 % USD 25 000,00 USD 487,50
over $75,000 2,10 % USD 145 000,00 USD 3 045,00
Annual tax amount USD 4 407,50
Calculated tax percentage 1,76 %

Value Tax step Tax amount Tax cost
USD 500 000,00
under $30,001 0,00 % USD 30 000,00 USD 0,00
$30,001 to $50,000 1,75 % USD 50 000,00 USD 875,00
$50,001 to $75,000 1,95 % USD 25 000,00 USD 487,50
over $75,000 2,10 % USD 395 000,00 USD 8 295,00
Annual tax amount USD 9 657,50
Calculated tax percentage 1,93 %

Value Tax step Tax amount Tax cost
USD 1 000 000,00
under $30,001 0,00 % USD 30 000,00 USD 0,00
$30,001 to $50,000 1,75 % USD 50 000,00 USD 875,00
$50,001 to $75,000 1,95 % USD 25 000,00 USD 487,50
over $75,000 2,10 % USD 895 000,00 USD 18 795,00
Annual tax amount USD 20 157,50
Calculated tax percentage 2,02 %

(Sorry about the messed up columns, but i have trouble pasting html into the editor here so i can get it to look better)

I guess some of you has houses and know how much tax you have to pay, and how it is calculated.
I have also learned that in panama there are “workarounds” for everything.

Since a new house will get a 15 years tax exception (Assume the papers says that the value is under USD 100.000) in so case it is a huge difference and tax saving to just build a new house
On an older house from the 70-tees there is no tax exception.

The tax percentage is one thing, but the value the percentage is calculated from is the most important really. In some countries they have two values; sales value and tax value used for each separate purpose. Foe example I owned property from 1947 with sales value of USD 560.000 but tax value was only USD 24.000.

Question arises. (Back to the first question)
A: Since this case can have a play between 65.000 and 190.000 in value it would be great to know what will be uses a base to calculate the tax amount from?
If the tax will be lower than before since the new sales price is lower than the last sale?

Originally Posted by Thomasjefferson

(Sorry about the messed up columns, but i have trouble pasting html into the editor here so i can get it to look better)

Hello again
I have corrected a little in the calculation
Here is how it it's supposed to be I believe.


As you see. On a USD 60.000 home carries an annual tax of 0.91% = USD 545
On a million dollar home it works up to 2.03% tax = USD 20 262.50

Again; I would be grateful if anyone could contribute some info on the question on the tax value of a home. Especially when sold for lower price then earlier.