| Visiting Panama
Visiting Panama
Buying Property in Panama
What does it cost to call the United States?
The standard charges are $1.12 per minute, Monday to Saturday, 7 a.m. to 5 p.m.; 72 cents per minute, 5 p.m. to 12 a.m.; and 54 cents per minute from 12 a.m. to 7 a.m. It’s only 54 cents per minute all day Sunday. There is a $1 additional charge for each call. You can call direct by dialing 001 before the area code. The operators speak English should you have problems. You can practically eliminate these rates by using a VOIP (voice over Internet protocol
Are there many tennis and golf clubs, and how much do they cost?
Yes, there are about five or six operating golf resorts in the area. A round of golf will cost about $50 at a top club and maybe $20 at a run-of-the-mill course. Prices at tennis clubs are significantly cheaper than the prices at U.S. clubs. Adults can take private lessons for $20/hour or less and children for $5/hour.
What other kinds of entertainment and sporting activities are available in Panama?
You can find just about everything here. In the city, there are fantastic shopping, casinos, horse racing, bridge clubs, concerts, art openings, English-language theatre and cinemas, and all kids of great restaurants and nightlife.
In addition to golf and tennis, there are bowling alleys and an ice-skating rink in Panama City. In various parts of the country, you can go snorkeling, scuba diving, fishing…and Panama offers some world-class surfing breaks. You can hike and go biking in the mountains. There are many unique communities in Panama to visit, including those inhabited by indigenous people. There are also many volunteer opportunities her
Buying Property in Panama
Is it safe for a foreigner to buy and own property in Panama?
Yes! Buying property in Panama is very safe, and it is legal for foreigners to own titled property here. Private property in Panama is protected by the constitution of the Republic of Panama, and more than a dozen laws in Panama have been created specifically to protecting foreign property buyers. Foreigners can hold titled property in Panama in their personal names, although, for asset protection and tax reasons, it is normally recommend that foreign clients hold property in the name of a Panamanian corporation. Panama possession rights property, however, should the name of a Panamanian corporation, with the foreign person as the shareholder (or a Panama private interest foundation or trust as the shareholder in place of the foreign person) of the corporation.
What are the procedures to buy real estate in Panama?
Briefly: find a property you like, negotiate the price and terms with the seller or real estate broker; enlist a qualified Panamanian attorney to handle the due diligence and title search; have your attorney prepare a Promise to Buy/Sell Contract (a deposit of 10% is usually required at this time). Once your attorney has confirmed the property title is clean, then the final closing is scheduled, where both buyer and seller sign the final Buy/Sell Contract. At this point, payment is made to the seller, broker, and attorney from the escrow account. (In some cases, payment will be made after the public deed is transferred and registered into the buyer’s name.) The last step is to register the Buy/Sell Contract at the Public Registry and transfer the property title ownership from the previous to the new owner.
Must purchase contracts be in Spanish in order to be legally enforceable in Panama?
No, the law does not require that the buy/sell contract is in Spanish to be legally enforceable. But…if there is ever a dispute over the transaction in a court of law in Panama, the court will require that the contract be translated to Spanish by an official (licensed) translator. Commonly, therefore, original buy/sell contracts are prepared in Spanish, and clients are provided with an official English translation.
Can I block public access to the beach if I own beach front property?
The laws in Panama offer public access to all beaches, oceans, lakes and rivers in Panama. According to the law, unless there is access within 1000 meters from your property, you must allow public access.
How long does it normally take to register a title transfer in the Public Registry of Panama?
Sometimes it can be done within two business days, especially if an expedition fee is paid. In normal circumstances, however, it takes from one to three weeks, depending on the volume of transactions at the Public Registry.
How long does it normally take – from start to finish – to buy property in Panama?
From start to finish, the time frame is usually about six weeks, but it really depends on a many factors, such as the negotiation process between buyer and seller, whether the seller had a mortgage on the property, whether the buyer is financing, and the amount of work required of the attorneys and the public registry. If the buyer is financing you should plan for three months before closing
What is the normal down payment when purchasing property in Panama?
Usually, sellers will accept 10% as a down payment upon signing the promise to buy/sell contract. The down payment indicates "good faith" on behalf of the buyer, ensuring the seller that the buyer is serious. The down payment amount, though, depends on the particular transaction and the negotiations that occur. In some cases, sellers will demand as much as 50%, and in other cases, sellers will ask for as little as 5% or less.
What are average closing costs?
Generally, you can expect legal fees and closing cost to range between 1% and 3% of the sales price. Public registry fees alone can be as little as $15 or as high as $2,500 or more, depending on the sale price.
Who normally pays for the title transfer tax – the buyer or the seller?
It is the law in Panama for the seller to pay for the title transfer tax. In some cases, however, depending on the negotiations between the buyer and seller, the seller may request that the buyer pays the title transfer taxes.
Who normally pays for the closing costs on real estate transactions in Panama – the buyer or the seller?
Usually, the buyer pays all the closing costs except for the transfer tax, and normally the seller will pay his/her attorney to review the buy/sell contract. The closing costs payable by the buyer, include: his/her attorney’s fees for drafting the buy/sell contract, doing the title search, title transfer, escrow services, notary cost and public registry taxes. In rare cases, buyers and sellers negotiate special terms whereby the buyer or the seller share closing costs
Are escrow companies commonly used for property transactions?
In Panama, normally the down payments are NOT placed in escrow. This is why it is important to have an attorney represent you to be sure you are dealing with the rightful owner. The final payment can be placed in escrow through a bank. No other type of escrow companies are regulated in Panama.
Is it safe to buy shares of a Panamanian corporation which holds title to property in Panama?
As long as proper due diligence is done on the corporation and a proper title search is done on the property held by the corporation, then it is generally safe to buy property this way in Panama. It is important to enlist a qualified attorney to handle the due diligence and ensure that the corporation does not have any pending debt or liability (other than that established in the contract) and indemnify the buyer from that liability. The attorney will ensure that the seller is responsible for any liability for previous actions of the corporation and/or its directors, and that you, the buyer, is purchasing 100% of the corporation’s shares as well as 100% of the property title.
If I am a US citizen, can I use my IRA or 401K money to buy property in Panama?
Yes. There are several financial companies in the United States who offer services that facilitate the use of your IRA or 401K funds, which you can then use to invest in property anywhere in the world.
Is it legal to buy options on property in Panama?
Yes, but it is an uncommon practice and most sellers in Panama do not understand the concept.
Are options available on property in Panama?
Yes, but because most sellers in Panama do not understand the concept, it requires that you educate them so that they agree to offer you an option to purchase their property.
Do many sellers in Panama offer owner-financing options or leases with purchase options?
Leases with purchase options are common in Panama, although most sellers are more interested in selling altogether. If you go the lease-option route, please note that rental or lease contracts must be registered with the MIVI (Ministerio de Vivienda), which is the "Ministry of Housing" in order for the contract to be legal in Panama.
What is the liability for real estate investors that "flip" (buy & immediately sell) properties?
In truth, the liability for real estate investors in Panama is limited. The primary liability is capital gains taxes, which some people avoid through the use of Panamanian corporations. As long as you deliver what is promised, according to the terms of the buy/sell contract, buying and selling property in Panama is virtually liability free
Are there government taxes or fees for transferring property titles from the seller’s name to the buyer’s name?
Yes, the Panamanian government charges a 2% property title transfer tax. This tax is based on the sale price or the updated value, whichever is higher. In addition, other fees charged by the Public Notary and the Public Registry for registering the buy/sell contract vary depending on the length of the document and on the value of the sale.
What about property tax?
As a foreign resident, if you buy or build a new house, you won't pay property taxes for 20 years, nor will you pay taxes on foreign-earned income. Personal income tax is based on a sliding scale from a minimum of 4% to a maximum of 30%. A Value Added Tax of 5% to 10% is charged on most products and services. Transfer taxes on real estate are paid by the seller, and there is no inheritance tax or gift tax.
What about property title transfer taxes?
The government charges 2% of the registered value on the property deed each time you transfer title from one name to another. This is why most investors utilize Panamanian corporations to hold ownership to property. In this way, when they sell the property, they simply sell the shares of the corporation as a whole, avoiding a title transfer and the 2% title transfer tax.
Are there capital gains taxes on the purchase and sale of real property?
Yes, the law stipulates a 10% capital gains tax on the purchase and sale of real property in Panama. The capital gains tax is triggered upon the transfer of the filing for payment of transfer tax.
What about inheritance taxes?
There are no inheritance taxes in Panama, but the probate court process is lengthy and you will have to pay your lawyer’s fees. This is another reason to hold your Panamanian properties in a Panamanian corporation, and utilize a Panama Private Interest Foundation to hold the shares. This enables the corporation to distribute its assets to your beneficiaries, avoiding all inheritance taxes, probate, and legal delays. All assets will be distributed to your beneficiaries exactly as you designate, with no deductions whatsoever.
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