Closing costs in Panama: what buyers pay, and when

In a typical Panamanian sale, the seller carries the two big taxes: the 2% property transfer tax and the 3% advance on capital gains tax. The buyer usually pays notary and Public Registry fees, their own lawyer and, with a mortgage, the bank's costs. A 2026 law has also brought back a transfer tax exemption for the first sale of new homes. Here is what each cost is, who normally pays it and when it falls due, checked against the DGI, the Ministry of Economy and Finance and Panamanian law and tax firms.

The costs at a glance

Most of these items can be reassigned in the contract. The table shows the legal position and what is customary; your promesa de compraventa is what counts for your purchase.

Property transfer tax (ITBI)

The impuesto de transferencia de bienes inmuebles was created by Law 106 of 1974 and is 2%. The DGI collects it through its Form 106 on the e-Tax 2.0 system, and the payment has to be recorded in the public deed: the Public Registry won't register a transfer without it.

What it is charged on

The tax base is the higher of two figures:

• the price stated in the deed, or
• the cadastral value at the time the seller acquired the property, plus improvements, plus 5% of that cadastral value for each full year the seller has owned it.

That annual 5% catches people out. Take a home bought six years ago with a cadastral value of $150,000. The adjusted value is $150,000 plus 30%, or $195,000. If it now sells for $250,000, the tax is 2% of the price, $5,000. If it sells for $180,000, the adjusted value is higher, so the tax is 2% of $195,000, $3,900.

Who pays it

By law the seller pays. On resales the parties sometimes agree to split it or shift it, so read the clause before you sign. Whoever has agreed to bear it, the payment has to be made before the transfer can be registered.

New homes: the 2026 exemption

For decades the first sale of a new home didn't pay ITBI. That exemption was repealed in 2025 (Law 468), and for most of 2026 developers paid the general 2% on first sales. Law 546, signed on 31 August 2026, brings back a narrower version:

• What qualifies: the first sale of a newly built home, formalised within two years of the occupancy permit. Sales formalised after the law took effect can also qualify when the occupancy permit is older, as long as the sale is formalised within 30 months of the permit.
• The exemption: the first $120,000 of the tax base is exempt.
• Above $120,000: reduced rates rising from 0.5% (for the part between $120,000 and $130,000) to 1.8% (between $190,000 and $200,000).
• Who pays: the seller. The law says contract clauses that make the buyer pay or reimburse this tax are void.
• The seller's declaration: the seller states in the deed, under oath, that the home is new, that this is its first sale and the date of the occupancy permit.

Sources differ on homes above $200,000. The Ministry of Economy and Finance says they fall outside the reduced scale; a Panamanian law firm's reading is that they keep the $120,000 exemption and pay the general rate on the amount above $200,000. If you are buying a new home at that level, have your lawyer confirm the calculation before you sign.

Separately, a developer that sells new homes as its ordinary business pays income tax on those first sales at its own reduced rates, rather than the 3% described below. That is the developer's cost, not yours.

Capital gains tax: why the buyer should care

The capital gains tax (impuesto sobre la ganancia de capital) is the seller's income tax on the sale, declared on the DGI's Form 107. The seller pays 3% of the higher of the price or the cadastral value. The seller can then treat that 3% as the final tax, or declare the actual gain and pay 10% of it, with the 3% credited.

It isn't your tax, but it matters to you: the DGI filings and certificates for the sale have to be in order before the Public Registry records the transfer. Your lawyer's job is to see that the seller's taxes are paid and documented so the registration isn't held up.

Notary, registry and legal fees

• Notary: the sale is signed as a public deed (escritura pública) before a notary, who is a public official. The Panamanian firms we checked put the notary's fee for a home at a few hundred dollars, more for higher-value or complex deeds.
• Public Registry: registration fees follow the Registry's official tariff and rise with the value; for a home they typically run to a few hundred dollars. The buyer usually pays them.
• Your lawyer: the firms we checked quote roughly 1% to 2% of the price, or a flat fee, and some include notary and registry costs in that figure. Agree the fee and what it covers in writing at the start.

If you buy with a mortgage

Banks set their own fees, so ask for a written breakdown. What we could confirm:

• Insurance: life and fire insurance are required with a mortgage.
• Appraisal: the bank will want the property valued.
• FECI: a 1% annual surcharge on local loans above $5,000. According to the Superintendency of Banks' criteria, a loan for your primary residence is exempt, once per borrower, while country or holiday homes are not. Banco General adds that foreign nationals without permanent residency pay FECI. For buyers of a second home in the interior this can make a real difference to the cost of a loan, and residency status matters: see our guide to residency options.

Paz y salvo certificates

A paz y salvo is a certificate showing that nothing is owed. For the transfer to go through, the Registry's requirements include:

• the property tax paz y salvo from the DGI, and
• the water paz y salvo from IDAAN.

In a condominium or a community with maintenance fees, also ask for proof that the fees are paid up. These debts belong to the seller, but your lawyer should confirm everything is cleared so you don't inherit arrears. After closing, remember to register the home as your primary residence for property tax if it qualifies; our property tax guide explains why that matters.

The closing, step by step

1. Reservation. A written reservation takes the home off the market while the documents are prepared.
2. Title check. Your lawyer checks the property at the Public Registry: owner, liens, mortgages, and that it is titled rather than held under possession rights. See titled property vs possession rights.
3. Promesa de compraventa. The promise to purchase sets the price, the payment schedule, the deadlines and who pays which costs. A deposit is usually paid here; your lawyer advises how it is held, often in escrow.
4. Financing and payment guarantee. With a mortgage, the bank issues an irrevocable payment letter (carta promesa de pago) in the seller's favour. It pays once the deed is registered in your name, free of liens. Cash buyers can use escrow instead; your lawyer sets the release conditions.
5. Taxes and certificates. The seller pays the transfer tax and the capital gains advance and gathers the paz y salvo certificates.
6. Escritura. Both parties, or their representatives with a power of attorney, sign the public deed before the notary.
7. Registration. The deed is filed at the Public Registry. The transfer is complete on registration, and that is when the bank pays under its letter.

For the homes we build and list ourselves, the ChiQ Group company selling the home is the titled owner, and you close directly with your own lawyer, the notary and the Public Registry. Our buying guide sets out the full process, and you can browse the residences or book a viewing.

Frequently asked questions

Does the buyer pay transfer tax in Panama? Not by law: the 2% transfer tax is the seller's. On a resale the contract can shift or split it, so check the clause. On the first sale of a new home under Law 546, clauses that pass the tax to the buyer are void.

Is the transfer tax based on the price? On the higher of the price or the adjusted cadastral value: the value when the seller bought, plus improvements, plus 5% of it for each full year of ownership.

What is the 3% the seller pays? An advance on the seller's capital gains tax, calculated on the higher of the price or the cadastral value. The seller can keep it as the final tax or pay 10% of the actual gain instead.

Do I pay FECI on my mortgage? A loan for your primary residence is exempt, once per borrower. Loans for second or holiday homes are not, and at least one major bank charges it to foreign nationals without permanent residency. Ask your bank in writing.

When do I become the owner? When the deed is registered at the Public Registry. With a mortgage, that is also when the bank pays the seller under its payment letter.

Sources: Dirección General de Ingresos (ITBI Form 106 and e-Tax Form 107 guidance), Ministerio de Economía y Finanzas (announcement of Law 546 of 2026), Superintendencia de Bancos (FECI criteria), Panamá Digital (Public Registry requirements), Law 106 of 1974, PwC Worldwide Tax Summaries, Kraemer & Kraemer, RC Group, Lovill, Legal Solutions Panama, Panama Legal Group, Relo Firm, Banco General, La Prensa and La Estrella de Panamá. Checked September 2026. This is general information, not legal or tax advice: confirm current rates and your own position with an independent Panamanian lawyer.