Panamanian Property Is Legal and Affordable for
Foreign investors love Panama and have targeted
this nation as a prime destination for a second
home for vacations, retirement and investment.
What's the main attraction? Price. Property in Panama
is relatively affordable. Buyers can purchase highly-desirable
property in Panama for less than one third or one
half what they might pay for comparable property
in the U.S.
property in Panama is safe and easy - foreigners
enjoy the same property rights as Panamanians. There
are over a dozen laws in the country that have been
enacted to specifically protect foreign investors.
Panama's constitution also protects private property
and its owners. Every year, thousands of property
transaction are conducted without problems.
Additionally, there is real estate readily available
in Panama to suit all budgets and tastes. From a
luxurious high-rise apartment, to a tropical beachfront
condo, or a breezy mountain retreat, there is a
perfect piece of Panama property for every type
for Buying Real Estate in Panama
first step to owning property in Panama is to find
a property you like. You can work with a real estate
agent who knows what's on the market and can explain
the pros and cons of each property to you. That
agent can help guide you through negotiations and
prepare you for the transaction.
you should seek the advice of a qualified attorney
in Panama to manage the title search on the property
and gather all the necessary documents.
attorney should then prepare a contract to lock
in the sale of the property and terms as agreed
upon by you and the seller. Depending on the seller's
terms this may also be the point where you give
your deposit to the seller. At this point, you should
investigate financing options and have money available
in an escrow account.
your attorney has determined that the title of the
Panamanian property you wish to buy is clean, closing
will be scheduled and both you and the seller will
sign a final contract on the purchase of the property.
is then made to the seller, the attorney and the
broker from the escrow account, however, in some
cases, payment is not made to the seller until after
the property's public deed is registered in the
name of the buyer.
Estate Taxes and Closing Fees in Panama
Panamanian government takes in a 2% tax for the
transfer of a property's title. That amount is based
on the value of the property as recorded in the
deed of sale. As with any real estate transaction,
in Panama, you'll most likely pay other fees for
notary publics as well as the public registry. These
fees will be in the neighborhood of $200 to $300
for the sale of real estate in Panama.
customary for the seller to pay the property's transfer
tax, however this can be negotiated and, on occasion,
the seller may insist the buyer pay that fee. As
for the closing fees, usually, each party pays for
their own closing costs, however, in some cases
the seller and buyer negotiate terms whereby one
or the other pays all the costs. So in general,
it depends on what you negotiate with the seller.
While it's legal for foreigners to own property
in Panama using their name, it is advisable that
those about to purchase property do so in the name
of a Panamanian corporation for protection of assets
and income tax reasons.
rights (different than a title) should always be
held in the name of a Panamanian corporation, and
the foreign person/purchaser should be listed as
the shareholder of the corporation. An attorney
can assist with the process.
Closing costs can vary greatly from transaction
to transaction. In general closing costs in Panama
A legal property transaction fee in the amount
of $1,200 USD
$250 - $350 for the public registry title transfer
.5% to 1% of the transaction fee set aside in
A $1,000 incorporation fee (plus tax) to set up
a Panama corporation
If the property is already owned by a Panamanian
corporation, then #4 is not necessary.
for Purchasing Property in Panama
on roughly six weeks from start to finish when purchasing
property in the country of Panama, however there
are a number of factors involved that can change
the timeline including prolonged negotiations and
the public registry system. Usual property transaction
involve the following procedure:
Buyer/seller agree to price and terms.
Lawyers are provided with documentation
so they can perform title search
Lawyers draft purchase contract
Buyer/seller review the contract and schedule
a date for closing and final signing of the contract.
Buyer sends down payment and legal fees to escrow
Buyer/seller sign promissory contract and down
payment is made to seller via escrow account.
Final title search is completed.
Buyer moves final payment to escrow account.
Attorneys draft final contract.
Closing takes place and final contract is signed
by seller and buyer.
Contract is registered with the public registry
so title transfer procedure can be started. (this
could take between 2 and 30 days)
Attorneys receive final deed from public registry
and prepare final documents to be sent to buyer.
often, English-speaking purchasers become concerned
that their contract will be in Spanish and they
will miss something vital in the contract. However,
Panamanian law does not require a real estate purchase
contract to be in Spanish to be legally enforceable.
However, if a legal dispute does arise over the
contract, it must be translated into Spanish by
a licensed translator. Many law firms draft the
original contract in Spanish and deliver a translated
version at closing so that English clients feel
Money From a 401K or IRA to Purchase Property in
your retirement savings is perfectly acceptable
for buying real estate in Panama. It can be put
toward the down payment or used to make the entire
purchase. There are a number of financial institutions
that specialize in the movement of U.S. citizens'
retirement funds into self-directed accounts that
allow you to purchase or invest in property in Panama.
Payment on Real Estate in Panama
sellers accept 10% as a down payment after the buyer
has signed the promise to buy/sell contract. The
money is a sign of good faith that you are serious
about the purchase of the property.
10% is a fairly typical down payment amount, it's
not necessarily standard. Some sellers accept 5%
or lower, while some sellers will settle for no
less than 50% of the selling price as down payment.
of Buying and "Flipping" Homes in Panama
major liability for real estate investors who buy
and then quick sell or flip homes in Panama is capital
gains tax, which can often be avoided through the
use of a Panamanian corporation. Buying and selling
property in Panama is nearly 100% liability free
as long as you deliver exactly what is stated in
the final, signed contract.
Information Regarding Panama Real Estate
Panama, property taxes are only applied to properties
with a registered value that
is over $30,000 USD. Registered value is the value,
which is contained within the public deed in the
Public Registry. The maximum annual property tax
is 2.1% for any real estate valued above $75,000
title transfer taxes are also something to keep
in mind when buying and selling real estate. The
Panamanian government charges a 2% tax on either
the most recent property value or the sales price,
whichever is greater. This is why many investors
use corporations in Panama to hold ownership of
a property so that when they sell the property,
they are simply selling shares of the corporation
and avoiding a title transfer and the 2% tax.
uses a system of short- and long-term capital gains
tax. This rate differs between corporations and
individuals. Until 2006, real estate owned by a
Panamanian corporation could be sold without paying
capital gains since only the shares, and not the
real property, was changing hands. This loophole
has now been removed by the government.
and Insurance Options for People Purchasing Property
is no shortage of banks in Panama to help you reach
your goal of owning real estate in Panama. Whether
it's for investment, retirement or simply a place
to vacation in the winter, banks in Panama are very
capable of helping you with financing. Some choices
include Scotia Bank, HSBC, BAC International and
Banco Nacional de Panama. Many banks in Panama have
parent companies in the United States and Canada.
a loan is backed by collateral such as a bank deposit,
or other liquid asset, banks have general criteria
that must be met before you are given a loan:
The real estate must be titled in the public registry
The property must be located in an approved region.
The property must have certain improvements (house,
garage) with a value.
The bank will only finance up to 70% of the purchase
price of the property.
The bank will mandate that the purchase price
not exceed the appraised value of the property.
terms of loan documents, the majority of banks in
Panama have requirements that differ in some ways
from loans in the United States and other countries.
To process a mortgage loan in Panama, most banks
A photocopy of your current, unexpired passport,
including all pages within
A photocopy of one additional form of photo ID
Two original financial letters of reference
Two references from a commercial, professional
or personal source
A photocopy of a utility bill showing a physical
address that matches the other documents
A complete resume
Financial statements and tax returns for the past
A photocopy of the registered title deed and registered
survey of the property you wish to buy
Original certificate of title deed from the public
registry of Panama
A complete property appraisal by an approved appraisal
Loan rates are typically the same as those in the
U.S., and can depend on a number of factors that
include the type of property you are buying in Panama
(commercial, investment, etc.), the age of the dwelling,
loan terms, applicant age and status (retired, self-employed,
etc.), and collateral offered to the bank.
Those who are of a certain age and on a fixed pension
may be qualified to receive a special discount on
mortgage rates. There also special incentives for
first-time buyers in which the buyer and the property
meet certain requirements for interest rate and
The buyer MUST be a first-time buyer in Panama.
The property being purchased in Panama must be
The real estate must be for residential purposes.
The loan amount must be between $25,000 USD and
The amount of the financing cannot be greater
than 95% of the appraised value of the property.
The property must be titled.
The loan must be for a term of 15 years or less.
While this may seem like a lot to go through to
buy property, the process tends to go very smoothly.
Appraisals usually cost between $150, and $1,000
USD, depending on the size of the property. The
larger the property in Panama and the greater the
distance from an urban center, the more money the
appraisal will cost.
inspections cost between $50 and $300 and are, again
based on the size of the property and type of property.
insurance for properties in Panama is available
and offered by reputable international companies,
but is not necessary to obtain financing. Title
insurance costs roughly 1% of the value of the property
with a minimum of about $1,000.
Notes on Buying Property in Panama
quality of life combined with great values have
made Panama a popular place for foreigners to buy
real estate. Mainstream media, American TV programming
and entertainment, excellent healthcare, reliable
infrastructure, a the U.S. dollar as currency -
these are all influenced by Panama's close ties
with the United States. The country of Panama truly
is a tropical paradise with a warm attitude toward
foreigners, low crime and an eco-friendly way of
estate in Panama is still relatively affordable.
You can buy a desirable home or residence in an
upscale neighborhood for between 1/3 and ½
of what the property would cost in the United States.
Panama has real estate to suit any taste and budget.
economy in Panama is also booming. With a $5.2 billion
Panama Canal expansion will come a huge influx of
money into the already strong economy of Panama.
The canal's contribution to the Panamanian economy
will nearly triple with this project and with this
will come appreciation in Panama real estate values
- especially in the areas next to the canal.
you have more question about purchasing property
in Panama, don't hesitate to contact us. We have
the knowledge, the contacts and the integrity to
answer all your questions and handle your real estate
The information above is general background about
purchasing property in Panama and is not meant as
a substitute for the advice of your attorney or
accountant, who can take into consideration your