About Buying In Panama
- Foreigners may buy property in Panama with the same rights and protections offered to nationals.
- A foreigner performing an investment of a minimum of $40,000 up to a maximum of $150,000 may obtain permanent residence after 4 years of having applied for the residence, and after 5 years of having the permanent residence, he may apply for the Panamanian nationality.
- A foreigner acquiring a property to his name, for a minimum value of $200,000 and who proves that he has economic solvency, may apply for the permanent residence after 1 year of having applied for the residence, and then after 5 years of having the permanent residence, he may apply for the Panamanian nationality.
- A foreigner acquiring a property to his name, with a minimum value of $80,000 and with a long term deposits in a local bank, with a duration of at least 2 years, for a minimum of $120,000, may apply for the permanent residence after 1 year of having applied for the residence, and after 5 years of having the permanent residence he may apply for the Panamanian nationality.
- As a general rule, the costs assumed by the buyer would be those in connection with the closing of the transaction (notarial services, registration fees, legal expenses and banking expenses).
The tax on transfer of a real property must be paid by the seller. This tax corresponds to 2% of the sale price or cadastral value of the property whatever is higher.
- The seller is obliged to pay income tax for the profit in the disposal of a real property. In most cases, said tax shall be ten percent (10%) on the total profit obtained in the operation, but is is recommended to consult with a local fiscal advisor since there might be other ways to determine this tax.
- The buyer acquires the real property upon the registration in the Public Registry, Property Section, of the Public Deed containing the sale agreement. The registration takes approximately 10 business days, but it may be paid a fee for altering the shift for the amount of US$250.00, in addition to the respective registration fee for the deed of sale to be treated with priority.
- It is possible to use a Panamanian corporation or any other offshore vehicle or foundation for it to have the ownership of the property. The cost for the incorporation of a company or foundation amounts to approximately US$1,000.00, including legal expenses.
- Properties enjoy a period of exemption of the real estate tax, depending on their value, as follows: up to US$100,000 it is exempted for 15 years; above US$100,000 up to US$250,000 is exempted for 10 years and those having a value exceeding US$250,000 are exempted for 5 years. Projects obtaining their construction permits before September 1, 2006, shall enjoy 20 years of tax exemption, regardless of the value of the property, provided that the registration of the improvements is performed before August 31, 2007, an extension until 2015 is in process of approval by the Panamanian parliament, pending approval
- Once elapsed the exemption period, the property tax is the only tax that applies to the ownership of a real property, which is relatively low, with a progressive rate but which primarily is 1.05% ¬2.1 % per year on its registered value.
- In Panama there is no tax on Patrimony. Tax on the sale or transfer of the property: The seller, whether a natural or a legal person, is obliged to pay the tax on transfer of the real property, which is two percent (2%) on the total value of the property.
- The seller, whether a natural or a legal person, is obliged to pay the tax on the total profit of the sale, which in most cases is ten percent (10%) of the total profit obtained in the operation.Source the panama planner edition 007/2006