When we talk about buying and selling real estate, we always hear our broker or lawyer refer us to a 5% tax, as part of the expenses of the process, because when we sell properties the seller is obliged to pay 2% for the transfer of real estate and 3% capital gain. These taxes fall on the person who sells and not on the property.
2% is paid on whichever is greater, the value of the property updated to the DGI system (General Directorate of Revenues of Panama) or the sale price. At this point I must clarify that the sale price is not always higher. Sometimes and depending on the registered value and the number of years that the property has, this could be greater than the sale value.
As for the 3%, tax called capital gain tax, and which is nothing more than an income tax in advance, it is paid in the same way, at the higher value between the sale and the registered value, and it is a tax inescapable. This tax must be paid even though the owner of the property has considered the transaction is showing a loss. The forms of each tax and their proof of payment are essential requirements for closing before the notary public.
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