Overview of the Real Estate Buying Process in Panama
It is increasingly common that someone wants to buy real estate in a different country than his or her origin or residence, either for business purposes or for living. Therefore, we, HalloCasa strive to provide reliable information to our readers which also entails the specification of how the buying process works in detail.
According to the Panamanian Constitution, any foreigner has the right to acquire real estate in this country, except for the areas close to the borders to Colombia and Costa Rica (10 miles from the border).
2. You like a property
We are glad to see that you are interested in a property published on HalloCasa. On HalloCasa, you will be able to use a lot of tools in order to understand the process of how to buy a property, in addition to obtaining general information about it. You will also find documents and additional available information, allowing you to investigate in detail the environment and infrastructure of the property, thus facilitating the process.
If you like a property and are interested to learn more about it, one of the first steps should be to research in the public registry office to confirm that the property is free of mortgage liens or limitations that may affect the process.
3. Contact the seller
In Panama, property sales are made in two ways: directly through the owners or intermediaries such as real estate brokers. HalloCasa will indicate the language in which you can communicate with each respective contact person. Most agents speak English, but if you need a translator, you will also be able to find those on HalloCasa.
4. You will receive detailed information on the property
The seller will send you all the necessary and available documents to you. However a visit to the property could be of interest to you. If you need help with travel arrangements, you can contact “Experts” directly via HalloCasa who are open to advise you at the time you contact them.
5. You negotiate the contract and the purchase price
Contract negotiations are usually processes in which both sides gradually approach each other. It is important to note that in Panama specific conditions apply to the sales contract, so it will be useful to know its details. For example, you can read about additional purchase costs in our FAQs below, which might be interesting for you.
6. You sign the contract and make payment
You are about to acquire your property! You sign the contract, either personally in Panama or through an authorized representative in Panama. In HalloCasa you will find information about notaries whom you can contact. Read our detailed buying process below of how to buy real estate in Panama.
7. You become the owner of the property
Your property is now registered on your name in the Public Land Registry Department of Panama. Congratulations! You acknowledge that this country has great potential and believe this is a promising country. We are happy for you! Enjoy your property!
Detailed Process of the Buying Process of Real Estate in Panama
- 1. Finding the right property
- 2. Contacting the owner / broker
- 3. Transferring Information
- 4. In case of contacting an appraiser
- 5. Signing the promissory sales contract
- 6. You transfer the money to a bank account in Panama
- 7. You can either buy directly from within Panama or from outside Panama:
- 7.1 Option 1: You travel to Panama
- 7.2 Option 2: You buy from abroad
- 8. Signing the contract in Panama
- 9. Signing the contract from overseas
- 10. Registration of the (“Escritura”)
- 11. Opening a bank savings account
1. Finding the right property
For each property, you will find information about the following topics:
- – The property itself
- – Location
- – Infrastructure
- – Demographics
- – Additional information
2. Contacting the owner / broker
Methods of contacting the owner/broker:
- – Via E-mail
- – Via Telefon
- – Via Skype
Pay attention to the details of the language skills of the owner / broker.
3. Transferring Information
The owner or property agent sends documents:
The Certificate of Availability, “Certificado de Libertad de Gravamen”:
- – This is also known as “Certificado de Finca”. This document contains the entire history of the property and can be requested at the Public Registry. This certificate helps you to confirm if the property is free of mortgages and it also lists the name of the real owner. It is important to mention that the Land Registry Department oversees the registration of property titles in the nine provinces of the country.
Copy of invoices paid real estate tax:
- – In Panama, this tax is being paid three times annually: at the end of April, the end of August and and the end of December, respectively.
- – At the time of the real estate purchase, it is important that this tax is paid by the previous owner. Make sure that all the tax payments for the current calendar year were paid. The owner is obliged to pay those taxes and therefore needs to know the tax identification number of the respective property, also known as RUC (“Registro Único de Contribuyente”). Each titled property in Panama is assigned one RUC.
Copies of invoices paid administrative expenses ( “Paz y Salvo condo Maintenance”):
- – This only applies if the property belongs to a condominium or condo with management or maintenance services.
- – The legal owner or real estate agent must provide a statement that management bills have been paid. This should include the respective receipts or invoices evidencing the respective payment. This also applies to all other public services such as electricity, water, gas and telephone. In the Downloads section you can download examples of such documents.
- – Should you buy from the legal owner directly, we advise you to use a lawyer and to translate and certify all documents before they are sent. Later, you will find translators on HalloCasa.
4. In case of contacting an appraiser
A real estate appraiser, among other things, reports financial liabilities of the respective property, certifies if the property is legally registered, and estimates the property´s value.
On HalloCasa you can contact experts and real estate appraisers. You will find a list of several experts recognized by the National Land Management Authority of Panama ANATI, with appropriate information:
- – Name of Assessor
- – Contact Details
- – Available languages
Professional appraisers must be accredited by the Directorate of Cadastral information and Appraisers of the ANATI.
5. Signing the promissory sales contract
- – The market price (or actual value)
- – The appraised value (optional)
- – The environment
Either you or your representative signs the promissory sales contract. The key parts of this contract are:
- – Full identification of the buyer and seller. Foreigners are identified in Panama with their passport.
- – Detailed description of the property including tax identification number or RUC “Registro Único de Contribuyentes”.
- – Property value and payment. This should also specify the value of the penalty clause in case of default by either party.
- – You must include the notice in which the final deed is signed, and the date and time of the signature.
- – Likewise, the distribution of notary fees, taxes, and any other expenses incurred in the purchase and sale process are stipulated.
- – For real estate transaction fees in Panama, see the section “What are the transaction costs (notary fees, taxes, transfer costs)?” in our FAQs below.
- – If you make the purchase directly with the legal owner, ask a lawyer to translate and certify all documents. Make sure you have a copy of these. In the future, HalloCasa will provide a list of translators so you can contact those directly.
- – In Downloads you can download examples of such documents.
6. You transfer the money to a bank account in Panama
To make a bank transfer, you have several options:
- – Either you have your own account at a bank of Panama or someone in Panama with a Panamanian bank account. That is, you need a representative to whose account to transfer the money. This should be preferably a different person than the owner. In this respect, the document “Example of a Power for a Representantative” in Downloads could be of help to you.
- – In Panama, especially for projects where the purchase of the property is done before construction, it is common to transfer the money to a trustee. The trust holds the money until the conditions comply to previously stated terms between the construction company and the and the buyer.
- – In the future, HalloCasa will provide a list of fiduciaries regulated by the Superintendency of Banks of Panama.
Both your representative and you should consider the following:
- – The corresponding bank or construction company will provide the form with which the money can be transferred to the fiduciary.
- – According to the currency of payment, remember that the value of Panañemo Balboa (PAB) equals the value of the US dollar (USD).
- – Note that banks may request additional documents. This depends on the particular bank.
- – In Downloads you can download the form to open a savings account if you choose to do so personally. Note that not all banks provide this service to foreigners.
7.1 Option 1: You travel to Panama
- – Before leaving your home country, make sure you plan to stay enough days in Panama necessary to conduct the entire buying process. Remember to take all the necessary documents with you.
- – Check with your bank about the best option to transfer the money to Panama according to the vendor.
7.2 Option 2: You buy from abroad
- – In this case, you must provide a power to a representative in Panama, make sure the he/she and the documents meet the requirements that were previously indicated.
- – Since this document needs to be legalized at the location closest to your residence, we suggest you to consult the Consulate of your country so that you make sure that the document meets all the required conditions. This saves time and you can advance the process.
- – In Downloads you can download an example of a power of this kind.
9. Signing the contract from overseas
- – The notary checks all documents.
- – Your representative signs the deed and makes the agreed down payment.
10. Registration of the (“Escritura”)
- – Once the notary publishes the Escritura (you request the Escritura with a copy of the receipt that was handed over when you applied for it; you can find an example of that in Downloads), it is moved to the Public Registry for inscription. There, you will get a number with which you can request it again when the registration is effected.
- – After this process, a new “Certificado de Libertad” is being issued on which you appear as the new owner. Now, the property belongs to you.
Note: This process is based on a general case in Panama and could vary across provinces, counties (cities) and districts.
11. Opening a bank savings account
This is the standard process for several banks, however, some requirements may vary depending on the bank.
Requirements for foreigners to open a bank account in Panama:
- – Valid passport (identity of a secondary document such as driver’s license, credit / debit)
- – Verification of address
- – Lease agreement if you are a tenant
- – Utility bill
- – Bank reference
- – Three personal references
- – Social Security Number
- – Sustaining source of funds (letter of employment, income statement, payment receipts to justify the source of income)
- – Form for opening a bank account (depending on the chosen bank)
Note: The opening of accounts of foreign non-residents requires prior authorization by the bank verifying your documents. This might take some days.
What are the costs for the sale of a property in Panama?
Compulsory expenditure by the seller are:
- – “Transfer Tax”: 2% of the value of the sale (in Panama there is no VAT for this transaction)
- – Capital gains Tax: 3% of the value of the sale
- – Property Transfer Tax: 3%
- – “Paz y salvo” of the Property: this certification is issued by the DGI, “Dirección General de Ingresos”, and is free. This certificate states that the property´s tax payments are up to date. Its expedition takes about half a day.
Mandatory fees charged to the buyer are:
- – Notary fees: vary between USD100 and USD160 (depending on the value of the sale)
- – Registration fees in Public Registry
The recommended costs according to each case (the value of a Balboa equivalent to the value of one US dollar):
- – “Certificado de Libertad”: 30 PAB (Panamanian Balboa; equals around USD30 or € 28 state 09/2016 and its expedition takes two days. This is paid by the applicant. This can be obtained at the Public Registry.
- – Attorney fees for the preparation and certification of real estate documents depend on the accuracy of the services performed and the respective professional.
- – The commission of a real estate agent is usually 5% but rural places or island will have additional charges. Those additional charges vary among brokers and are paid by the person who hires the broker.
- – Appraiser, if desired: an appraisal costs around 0.015% of the sale price and inspections can cost between USD50 and USD500 depending on the particularities of the property. This value is paid by the person who him/her hires.
- – Translation costs, if necessary, pay by the person who him/her hires.
Also, see the link Doing Business.
Where I can find Panama real estate financing?
Since you probably are not a customer of a Panamanian bank, you need to handle all financial matters with the bank in your country of origin. If you want to open an account in a Panamanian bank, you can look at “Open a bank account in Panama,” depending on the requirements and conditions you can become a client of a Panamanian bank. Then you can make an appointment with your preferred bank. The bank will assess your creditworthiness and based on this they might offer you possible financing.
About the real estate market in Panama:
How liquid is the market?
According to the census of buildings, Panama had an increase of 7.9% in construction of new buildings in the first quarter of 2016, ie. approximately 1,455 units compared with 2015 (1,348), ie, an increase of 107 units.
The largest contribution was recorded in the residential sector, representing 79.1% of the built-up area, as follows:
- – Apartment Buildings: 67,460 square meters
- – Individuals Housing: 39,944 square meters
- – Duplex: 20,501 square meters
How has the Panamanian real estate market developed in recent years?
In recent years the real estate trend in Panama City consisted only of the sale of oceanfront buildings. Currently, however, there are 80 new projects being built, of which 20% are luxury properties. The real estate market in Panama is moving fast and its sales have increased by 20% in the first quarter of 2016 compared to the first quarter of 2015.
The Office Market in Panama
In 2016, the supply of offices is high compared to previous years. In 2015, for example, 2.5 million square meters were incorporated, however, net absorption was 1.5 million square meters. This situation itself, even though it does not directly apply to the construction sector, is an advantage that benefits businesses and small businesses due to the price decrease, affecting positively the business and generating preference of foreigners and companies when settling in Panama.
Living in Panama
The following types of housing are common in Panama:
- – There are two types of apartments in Panama which are in high demand: the apartments in buildings within the city center and those who are facing the sea. According to CentralAmericaData it can be expected that the amount of high-quality luxury apartments with sea view grows from 400 to 1,600 units until 2019. Although the beach apartments are preferred by foreigners, local citizen as well as the upper middle class chooses them, too.
- – There is a high supply of real estate houses. Some of the major residential areas (districts) are: Marbella, Punta Paitilla, Punta Pacífica, Altos del Golf, Bella Vista, Obarrio, San Francisco, Coco del Mar and Costa del Este.
- – On the outskirts of Panama: Albrook, Las Cumbres, Clayton.
- – According to studies by Panamaamerica.com.pa the preferred type of condominium projects are constructed with an amount between 8 and 25 floors and with in a range from 80 to 200 m2 for each residence.
What are the “Estratos”?
- – In Panama, there is a division into 5 social-economic strata 1 being the highest and 5 being the lowest. This defines the quality of infrastructure of neighborhoods. Each neighborhood is assigned a social stratum to and everyone can choose in which stratum to live in. The distribution is the following:
- Estrato 1 (rich)
- Estrato 2
- Estrato 3
- Estrato 4
- Estrato 5 (extreme poverty)
Do I have to declare my rental income in the Dirección General de Ingresos (DGI) of the Ministry of Economy and Finance of Panama?
Foreigners residing in Panama for more than 183 days a year and earning some income in Panama will be taxed at the same rate and in the same proportion as nationals.
No income tax has to be paid for incomes under $ 11,000 per year. For an income between $ 11,000 and $ 50,000 a tax rate of 15% has to be paid and income of $ 50,000 or more is taxed at a rate of 25%.
Is there a limit on the quantity or price for real estate investments?
There is no limit, however, the type of visa you are applying for depends of the amount of money you invest in real estate in Panama.
What kind of real estate properties can foreiners acquire in Panama?
- – Foreigners can buy all kinds of conventional properties unless it is less than 10 miles from the borders with Colombia and Costa Rica.
- – The property located in Panama are subject to Panamanian laws, even if their owners are foreigners.
- – The money set forth in Panamanian accounts both national and international license are considered domiciled in Panama so that it is covered by the Panamanian courts of jurisdiction.
- – The goods of foreigners or non-residents are regarded as “Foreign Assets” in Panama at the moment in which the transfer of goods is made.
- – Foreigners can not acquire Panamanian-registered aircraft to devote to public transport.
What immigration policies apply to foreigners? In case of emergency can I take my family?
- – Panama authorities have an obligation to protect foreigners within its territory and ensure the effectiveness of their rights.
- – Foreigners who hold a Temporary Visa or an Immigrant Visa are entitled to work in the country, provided they have a work permit issued by the Ministry of Labor and Development of Workforce.
- – When entering Panama happens due to the purchase of a property (real estate / farm) in a personal capacity for a minimum amount of USD300.000, the person must apply for permanent visa for two years and then renew it indefinitely.
- – In order to visit the foreign property owner, family members of the foreigner must apply for short stay Visa provided they comply with the provisions of Article 28 of Decree Law No. 3 of 22 February 2008 and Article 17.
Is there a reliable property manager on site?
In HalloCasa we provide a list of property managers.
Can I transfer money from Panama to my country?
Yes, you can transfer money from Panama abroad. We recommend you discuss this matter directly with your property manager.