How to Buy Property in Panama

Real Estate Attorney Services

Our real estate services include the preparation and review of purchase agreements, mortgages, titles, transactions, transfers, and other documents. Contrary to brokerage, a real estate attorney will help navigate the legal procedure when you decide to buy a property.

Ensure your real estate transaction is recorded, processed, and documented correctly with your team at Legal@Work. This service directly intervenes in transfers and contracts of sales, whether it is by its nature, by incorporation, destiny, analogy, by access, or representation.  

The real estate market in Panama is at an all-time high, offering juicy investment deals that may pique your interest.

How to buy a property in Panama

If you are planning to buy a property in Panama, there are three key steps to the process:

• Obtain a valuation and verify FINCA information. In Panama, an evaluo is required to apply for a mortgage. A FINCA needs to be reviewed to ensure no liens, taxes or other important information is attached to the property.
• Negotiate and elaborate on a contract of sale. When beginning the process, it is recommended to elaborate the contract of sale with the assistance of a local legal agent. The contract will serve as a guarantee for the owner’s safety during the transaction and protect them from possible fraud. One of the contracting parties undertakes to deliver a certain good and the other party agrees to pay a fixed price for that good in a contract of sale. For this reason, sales contracts are bilateral, they generate rights and obligations for both the seller and the buyer.
• Pay the applicable taxes. The next step is to pay the tax rates established by the Panamanian Tax Code and the declared value of the real estate per the contract of sale. The investor or owner should consider that once the property is transferred under their name or favor, they will need to comply with the annual tax rates for real estate properties.

The related taxes of purchased properties per the Panamanian Law can be divided into two main categories:

The main property refers to real estate intended for permanent use by the owner, for housing purposes. The applicable rates are:

• Properties with a declared value between $0 and $120,000 = exempt
• Properties with a declared value between $120,000 and $700,000 = 0.5%
• Properties with a declared value between $120,000 and $700,000 = 0.7%

Additional properties (besides the main property) including commercial or industrial properties are subject to the following rates:

• Properties with a declared value between $0 and $30,000 = exempt
• Properties with a declared value between $30,000 and $250,000 = 0.6%
• Properties with a declared value between $250,000 and $500,000 = 0.8%
• Properties with a declared value of more than $500,000 = 1.0%

Preparation of deed before a public notary

The last step is to validate the contract of sale before an authorized entity. In this case, the validated document will need to be registered in the Public Registry of Panama. To prove the validity of a property purchase contract in Panama at the time of buying or selling a property in Panama, it must contain the following:

• Consent and approval of the parties involved.
• Property in name of the seller at the time the inscriptions and transactions are made in the Public Registry.
• Defined price of the goods. The price of the real estate value must appear in the contract because, in case of failure to pay this price, it can be nullified.
• All public deed data must appear in this contract to be valid, including the real electronic Folio, location code, real estate unit.

Documentation of Paz y Salvo; The sales contracts must have this documentation:

• Paz y Salvo of the Property, the IDAAN, and the PH.
• Real Estate Transfer Tax Form (2%) and proof of payment.
• Income Tax advance form (3%) and proof of payment.

To help you in this process, in addition to a banker, you should seek the expert service of a real estate broker, so that the entire procedure is done under the tutelage of a specialist in the field.

Benefits of buying a property in Panama

Panama has a relatively stable political environment with a steadily growing economy, which is also reflected in the real estate market. As a result, the value of properties across the country is in constant increase, generating attractive opportunities for prospective investors.

Property investors have the choice to lease their properties or increase capital gains by selling it at a higher price. Similarly, you will be able to apply for a permanent residency if the property purchased in Panama surpasses a declared value of more than $300,000/usd.