| Buying Properties in Panamá | | | | benefits from lower property taxes (or possibly no |
| The following is general information on purchasing real | | | | property tax if the registered value is below $30,000), |
| estate in Panama. The different categories of land | | | | because the registered value does not reflect the |
| make it imperative to engage professionals for more | | | | actual purchase price. |
| detailed information. Real estate laws on the mainland | | | | The "Preferential Interest Law" |
| can be quite different than those on islands, coastal | | | | There is a law called the "preferential interest law", |
| areas, and areas near national borders. | | | | which offers special low interest rates, under the |
| Before handing over any money, make sure you | | | | following conditions: |
| consult with a professional and do a proper due | | | | 1- The buyer must be a first time buyer, |
| diligence investigation over the property. It is important | | | | 2- The property being purchased must be newly |
| to understand the rules and process your property | | | | constructed, |
| transaction correctly. | | | | 3- The unit must be for residential purposes, |
| The first step is to find a Panama property you like, | | | | 4- The amount being financed must be in the range of |
| and negotiate the price and terms of the sale with the | | | | US$25,000 to US$62,500, after the down payment, |
| seller (or Panama real estate broker). Second, you | | | | 5- The financing cannot be more than 95% of the |
| should seek a qualified attorney in Panama to handle | | | | appraised value, |
| the due diligence and title search on the property, | | | | 6- The property must be titled, |
| putting your Panamanian attorney in contact with the | | | | 7- The loan must not exceed a 15 year term. This is |
| seller or real estate broker to gather copies of the | | | | regulated under Law No. 50 (October 27, 1999), which |
| property title documents and survey (if available). Third, | | | | partially amended Law No. 28 (June 20, 1995) and |
| have your attorney prepare a Promise to Buy/Sell | | | | Cabinet Decree No. 44 (1990), stipulates that the |
| Contract to lock in the property sale and secure the | | | | benefits to the lending institutions are as follows: |
| terms agreed upon (a deposit of 10% is usually | | | | (a) 4% discount (also a tax credit to the financial |
| required by the seller upon signing the promise to buy | | | | institution) off the maximum fixed interest rate, which is |
| sell contract), plus this gives you time to do the due | | | | established by the Superintendent of Banks, will be |
| diligence and get your funds into the escrow account. | | | | awarded if the loan value is for more than $25,000.00 |
| Fourth, once the attorney has confirmed the property | | | | but less than $62,500.00, |
| title is clean, then the final closing is scheduled, where | | | | (b) 5% discount (also a tax credit to the financial |
| the buyer/seller sign the final Buy/Sell Contract. Fifth, | | | | institution) off the maximum fixed interest rate, will be |
| payment is made to the seller, broker, and attorney | | | | applicable if the loan is for less than $25,000.00. |
| from escrow (in some cases, buyers/sellers agree | | | | About the Government Property Taxes |
| that payment is made after the public deed of the | | | | Property taxes are only levied on properties that have |
| property is transferred and registered into the buyers | | | | a registered value of US$20,000 or more (registered |
| name). Sixth, the Buy/Sell Contract is registered at the | | | | value is the value stated on the public deed that is |
| Public Registry where they transfer the property title | | | | registered at the Public Registry). The maximum annual |
| ownership from the previous owner to the new | | | | property tax is 2.10% of the registered value of the |
| owner. | | | | land (land value under US$20,000.00 is exempt of this |
| Advantages by putting the property in the name of a | | | | particular tax, as per Law # 36 of 1995). Property tax |
| corporation: | | | | is also levied on the declared value of the building |
| 1- The corporate veil protects the property from any | | | | improvements on the land, however, the laws in |
| attacks from creditors or frivolous lawsuits against | | | | Panama offer tax exonerations for building |
| your personal name. | | | | improvements for up to 20 years (this was |
| 2- When you go to sell the property, you can simply | | | | implemented by the Panamanian government to |
| sell the corporations shares, saving you a 2% property | | | | promote new construction, which makes up a large |
| title transfer tax, and possible Capital Gains Taxes, | | | | portion of Panama's overall GDP). New properties |
| 3- When you go to sell the property, the buyer | | | | completed by 31st August 2006 will have a 20 year |
| benefits because the buy/sell contract does not have | | | | property tax exemption. Possession Rights properties |
| to be publicly registered, saving the buyer closing costs | | | | do not incur property taxes, since the property |
| 4- When you go to sell the property, the buyer | | | | technically belongs to the government of Panama. |