Authored by the expert who managed and guided the team behind the Panama Property Pack
Everything you need to know before buying real estate is included in our Panama Property Pack
Americans enjoy nearly the same property ownership rights as Panamanian citizens, with only a few border restrictions.
The process can be completed remotely through Power of Attorney, and several visa programs allow property buyers to obtain residency. Mortgage financing is available for foreigners, though down payments are typically 30-40% with interest rates around 7-9%. Popular areas include Panama City for urban living and investment returns, Boquete for mountain retirement, and Coronado for beachfront properties.
If you want to go deeper, you can check our pack of documents related to the real estate market in Panama, based on reliable facts and data, not opinions or rumors.
Americans can legally buy most types of property in Panama with the same rights as locals, except for land within 10km of international borders and the first 22 meters from beaches.
Property investment can qualify you for residency through programs like the Friendly Nations Visa ($200,000 minimum) or Golden Visa ($300,000 minimum), and the entire purchase process can be handled remotely.
| Key Factor | Requirement/Details | Notes |
|---|---|---|
| Legal Ownership | Same rights as locals | Restrictions near borders only |
| Down Payment | 30-40% for foreigners | Higher than local requirements |
| Interest Rates | 7-9% for foreigners | Includes 1% FECI tax |
| Property Tax | Exempt up to $120,000 | 0.5-1% above that threshold |
| Transfer Tax | 2% of sale price | Usually paid by seller |
| Remote Purchase | Yes, via Power of Attorney | No physical presence required |
| Residency Options | Multiple visa programs | Property investment qualifies |
Can Americans legally buy property in Panama, and are there any restrictions compared to locals or other foreigners?
Americans can legally buy property in Panama with nearly identical rights to Panamanian citizens.
The Panamanian constitution guarantees foreign nationals the same property ownership rights as locals for most real estate transactions. You can purchase residential properties, commercial buildings, condominiums, and land without nationality-based restrictions on property type, value, or quantity.
However, three specific restrictions apply to all foreigners, including Americans. You cannot own titled property within 10 kilometers of Panama's international borders with Costa Rica or Colombia due to national security regulations. The first 22 meters from the high tide line on all beaches remains public domain and cannot be privately owned. Additionally, certain islands and protected or indigenous territories are off-limits to foreign ownership.
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Outside these specific zones, you face no limitations on the number of properties you can own or their combined value, making Panama one of the most foreigner-friendly property markets in Latin America.
What types of residency or visa options are available for Americans who want to live in Panama after buying property?
Several visa programs specifically accommodate Americans seeking residency through property investment in Panama.
The Friendly Nations Visa requires a minimum $200,000 investment in Panamanian real estate, among other qualifying options like employment with a Panamanian company or a fixed-term deposit. This visa grants two-year provisional residency, which converts to permanent residency after two years and opens the pathway to citizenship after five years of continuous residence.
The Qualified Investor Visa, commonly called the Golden Visa, requires a $300,000 real estate investment until at least October 2026, after which the threshold may increase to $500,000. This program grants immediate permanent residency and allows citizenship applications after five years, making it faster than the Friendly Nations route.
For retirees, the Pensionado Visa offers residency based on guaranteed lifetime pension income rather than property investment, though many combine this with real estate purchases. Additional options include work visas, reforestation investment visas, and business investment visas, though these are less common for typical property buyers.
Each program has specific documentation requirements and processing times, with property-based visas typically taking 6-12 months for approval.
Do Americans need to be physically present in Panama to purchase real estate, or can the transaction be done remotely?
Americans can complete the entire property purchase process remotely without traveling to Panama.
The key mechanism for remote purchases is granting Power of Attorney to a trusted representative in Panama, typically your lawyer or real estate agent. This legal document allows your representative to sign all purchase documents, handle payments, and complete the title registration on your behalf.
All necessary documents can be signed digitally or through a Panamanian consulate in your home country. The Power of Attorney document itself must be notarized and apostilled in the United States, then registered with the Panamanian Public Registry before it becomes valid for real estate transactions.
However, many buyers choose to visit Panama at least once before finalizing their purchase to inspect the property personally, meet their legal team, and understand the local market dynamics. This visit isn't legally required but provides valuable peace of mind for such a significant investment.
Remote transactions work particularly well for pre-construction purchases, where the property may not be completed for months or years after signing the initial contract.
What are the step-by-step procedures and documents required for an American to buy property in Panama?
The property purchase process in Panama follows a structured eight-step procedure with specific documentation requirements.
1. **Property Selection and Market Research**: Choose your target location and specific property, working with a licensed real estate agent familiar with foreign buyer requirements.2. **Legal Team Assembly**: Hire a Panamanian lawyer to handle due diligence and contract review, plus obtain your Panamanian taxpayer identification number (RUC).3. **Offer and Preliminary Contract**: Submit a formal offer and sign a Promise to Purchase (Promesa de Compraventa) with typically a 10% deposit held in escrow.4. **Due Diligence Period**: Your attorney verifies the property title, checks for liens or encumbrances, confirms the seller's legal right to sell, and reviews all property documentation.5. **Financing Arrangement** (if applicable): Finalize mortgage terms with Panamanian banks, including appraisal and loan approval processes.6. **Final Purchase Agreement**: Sign the definitive purchase contract (Escritura Pública) before a Panamanian notary, with all parties present or represented by Power of Attorney.7. **Payment and Transfer**: Pay the remaining purchase price, transfer taxes (2% of sale price), registration fees, and legal costs.8. **Title Registration**: Register the new title with the Public Registry, completing the legal ownership transfer.Required documents include your passport, RUC taxpayer number, property title verification, property survey, Certificate of No Encumbrances, tax clearance certificate, municipal permits when applicable, and proof of payment for all transactions.
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Is hiring a Panamanian lawyer mandatory for Americans during the property purchase process, or just recommended?
Hiring a Panamanian lawyer is not legally mandatory but is universally considered essential for American property buyers.
While no law requires foreign buyers to use legal representation, the complexity of Panamanian real estate law and significant differences from U.S. property law make attorney representation practically necessary. A local lawyer protects your interests through title verification, lien searches, contract review, and ensuring compliance with all legal requirements.
Your attorney handles critical tasks including verifying the seller's legal right to transfer property, checking for outstanding debts or encumbrances against the property, reviewing all contracts for unfavorable terms, ensuring proper property boundaries and easements, and managing the closing process and title registration.
Legal fees typically range from $1,500 to $3,000 for straightforward transactions, representing excellent value compared to potential losses from purchasing problematic properties. Choose lawyers with specific experience in foreign buyer transactions and verified credentials with the Panamanian Bar Association.
Many successful American property owners in Panama emphasize that their lawyer was their most valuable advisor throughout the purchase process, often preventing costly mistakes that inexperienced buyers commonly make.
Are there any tax implications in the U.S. or Panama for Americans buying or owning property there?
American property owners in Panama face tax obligations in both countries, though Panama's property tax structure is quite favorable.
Panama property taxes are exempt for primary residences valued up to $120,000, making many properties tax-free. Above this threshold, rates range from 0.5% to 1% annually depending on property value. Transfer taxes of 2% apply to the higher of the sale price or registered value, typically paid by the seller. Capital gains taxes are 10% of net profit or 3% of gross sale price, whichever is lower.
Rental income faces progressive tax rates from 5.83% to 20.38%, plus 7% VAT for short-term vacation rentals. However, Panama offers various deductions for maintenance, management, and depreciation expenses.
U.S. tax obligations continue regardless of where you live. Americans must report worldwide income to the IRS, including rental income from Panamanian properties. Capital gains from property sales may qualify for the $250,000 individual or $500,000 married filing jointly exclusion if the property served as your primary residence for at least two of the last five years.
Property taxes paid in Panama are generally deductible on U.S. tax returns, and foreign tax credits may apply to reduce double taxation on rental income. Consult both U.S. and Panamanian tax professionals to optimize your tax strategy.
Can Americans get a mortgage in Panama as foreigners, and if so, what are the interest rates, conditions, and tips for approval?
Americans can obtain mortgages in Panama as foreigners, though terms differ significantly from U.S. lending standards.
| Mortgage Factor | Non-Residents | Permanent Residents |
|---|---|---|
| Loan-to-Value Ratio | 60-70% | Up to 80% |
| Down Payment Required | 30-40% | 20-30% |
| Interest Rates | 7-9% (includes 1% FECI tax) | 6-8% |
| Maximum Loan Term | 10-25 years | Up to 30 years |
| Income Requirements | Debt-to-income ratio under 35% | More flexible ratios |
| Documentation | Extensive income verification | Simplified process |
| Processing Time | 45-90 days | 30-60 days |
Required documentation includes passport, proof of income (tax returns, employment letters, bank statements), international credit report, bank references, and sometimes establishment of a local Panamanian bank account. Some lenders require a Panamanian co-signer for higher loan amounts.
Tips for mortgage approval include providing comprehensive income documentation, securing an international credit report, working with mortgage brokers experienced in expat lending, considering properties in prime locations that banks prefer to finance, and maintaining substantial cash reserves beyond the down payment.
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What are the most popular areas in Panama where Americans choose to settle, and why?
Five primary locations attract the majority of American residents and property buyers in Panama.
Panama City offers cosmopolitan urban living with modern amenities, strong expat communities, business opportunities, and excellent healthcare. The capital provides familiar conveniences like international schools, shopping centers, restaurants, and reliable infrastructure, making the transition easier for Americans accustomed to city life.
Boquete attracts Americans seeking a cool mountain climate and active expat community. Located in Chiriquí Province, this town offers outdoor activities like hiking and bird watching, lower living costs than Panama City, and a well-established American community providing social support and local knowledge.
Coronado provides beachfront living with resort amenities while remaining close enough to Panama City for convenient access to urban services. This beach town offers golf courses, swimming, fishing, and a relaxed coastal lifestyle that appeals to retirees and vacation home buyers.
Bocas del Toro on the Caribbean coast attracts Americans seeking a tropical island lifestyle with vibrant tourism, diving, surfing, and eco-tourism opportunities. The area offers a more adventurous living experience with unique Caribbean culture.
El Valle de Antón serves as a mountain retreat destination offering nature, outdoor activities, and peaceful living in a volcanic crater valley, popular with Americans seeking tranquility and cooler temperatures.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Panama versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
Which areas in Panama offer the best potential for rental income, capital appreciation, or both, based on current trends and forecasts?
Investment potential varies significantly across Panama's regions, with distinct advantages for different investment strategies.
Panama City delivers the highest rental yields at 5-7% gross annually, particularly in prime neighborhoods like Costa del Este, Punta Pacifica, and Avenida Balboa. These areas also show strong capital appreciation due to continued urban development, international business growth, and consistent demand from both locals and expats.
Coronado and Playa Blanca excel in vacation rental markets, generating substantial income during peak tourist seasons while maintaining steady appreciation as beach property demand increases. These locations benefit from proximity to Panama City and established tourist infrastructure.
Boquete offers stable long-term rental income driven by growing expat communities, though appreciation rates are more modest. The area provides consistent returns with lower volatility than beach or urban markets.
Bocas del Toro shows high tourism-driven short-term rental potential, particularly during Caribbean coast peak seasons. However, this market carries higher risk due to seasonal variations and infrastructure limitations.
Pedasí represents an emerging market with significant future appreciation potential as this Pacific coast town develops tourism infrastructure and attracts more international attention. Early investors may benefit from substantial long-term gains as the area becomes more established.
Current market data suggests Panama City for immediate returns, coastal areas for tourism income, and emerging markets like Pedasí for long-term appreciation strategies.
What's the current breakdown of real estate prices per city and region in Panama, especially in areas popular among Americans?
Real estate prices in Panama vary significantly by location, with premium urban areas commanding the highest prices per square meter.
| Area/Region | Price Range (USD/sqm) | Property Types | Target Buyers |
|---|---|---|---|
| Panama City - Punta Pacifica | $2,300-$3,000 | Luxury condos, penthouses | Executives, investors |
| Panama City - Costa del Este | $2,100-$3,000 | Modern condos, offices | Business professionals |
| Panama City - Avenida Balboa | $1,500-$3,000 | Oceanfront condos | Investors, residents |
| Panama City - El Cangrejo | $1,500-$2,800 | Urban condos, apartments | Young professionals |
| Coronado | $1,200-$2,000 | Beach houses, condos | Retirees, vacationers |
| Boquete | $1,000-$1,500 | Mountain homes, condos | Expat retirees |
| Bocas del Toro | $1,200-$2,000 | Island properties, eco-lodges | Tourism investors |
| Pedasí | $1,200-$2,000 | Beach properties, lots | Emerging market buyers |
| Santa María | $2,800-$3,500 | Golf community, luxury | High-net-worth individuals |
These prices reflect mid-2025 market conditions and vary significantly based on specific location within each area, property condition, amenities, and proximity to beaches or city centers. New construction typically commands premium pricing, while resale properties offer more negotiating flexibility.
What are the most common mistakes or pitfalls Americans face when buying property in Panama, and how can they avoid them?
Five critical mistakes account for the majority of problematic property purchases by Americans in Panama.
1. **Buying untitled property or "Right of Possession" land**: Always verify that properties have clear, registered titles rather than possession rights, which offer no legal ownership protection and cannot be easily financed or sold.2. **Skipping comprehensive due diligence**: Thoroughly investigate property titles, verify boundaries through surveys, check for outstanding liens or debts, and confirm all municipal permits and approvals before finalizing purchases.3. **Overpaying due to inadequate market knowledge**: Research comparable sales prices, understand local market conditions, and work with experienced agents familiar with both local values and American buyer expectations.4. **Attempting transactions without qualified local legal representation**: Hire experienced Panamanian attorneys specializing in real estate law rather than attempting to navigate complex legal requirements independently.5. **Ignoring tax implications and residency requirements**: Understand obligations in both Panama and the United States, including reporting requirements, potential tax benefits, and how property ownership affects visa applications.Additional common issues include purchasing in areas with infrastructure problems, buying pre-construction without proper developer verification, and failing to budget adequately for closing costs, which can add 4-6% to the purchase price.
It's something we develop in our Panama property pack.
Prevention strategies include thorough research, qualified professional guidance, realistic budgeting, and patience to make informed decisions rather than rushing into purchases based on vacation impressions.
How do Panama's livability scores, rental yields, tourism numbers, and growth outlook compare across different regions?
Panama's regions offer distinct advantages depending on your priorities for livability, investment returns, and growth potential.
| Region | Livability Score | Rental Yields | Tourism Impact | Growth Outlook |
|---|---|---|---|---|
| Panama City | High (8.5/10) | 5-7% annually | High business/leisure | Strong, stable expansion |
| Boquete | High (8/10) | 4-6% annually | Moderate eco-tourism | Steady, expat-driven |
| Coronado | High (7.5/10) | 6-8% annually | High vacation rentals | Strong tourism growth |
| Bocas del Toro | Moderate (6.5/10) | 7-10% annually | Very high tourism | Tourism-dependent growth |
| Pedasí | Moderate (6/10) | 5-7% annually | Growing tourism | Emerging market potential |
| El Valle de Antón | Moderate (7/10) | 3-5% annually | Low-moderate | Slow, steady growth |
| Santa María | High (8/10) | 4-6% annually | Luxury tourism | Exclusive market growth |
Panama City excels for urban professionals seeking career opportunities, modern amenities, healthcare, and educational facilities, while offering the highest investment liquidity and rental demand. Boquete provides the best combination of livability and expat community support for retirees seeking mountain living with moderate investment returns.
Coastal areas like Coronado and Bocas del Toro offer higher rental yields through vacation rental markets but require more active property management and carry seasonal income variations. Emerging markets like Pedasí present higher risk but potentially significant long-term appreciation for patient investors willing to accept current infrastructure limitations.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Americans can successfully purchase property in Panama with the same ownership rights as locals, making it one of Latin America's most accessible real estate markets for foreign buyers.
The combination of remote purchase capabilities, multiple residency pathways, favorable tax structures, and diverse location options from urban Panama City to mountain Boquete creates compelling opportunities for both investment and relocation purposes.
Sources
- TheLatinvestor - Panama Property for Foreigners
- TheLatinvestor - Property Panama American
- TheLatinvestor - Panama Real Estate for Foreigners
- Panama Sovereign - Friendly Nations Visa
- Golden Visas - Panama
- Live and Invest Overseas - Panama Golden Visa
- Living in Panama - How to Buy Real Estate
- Taxes for Expats - Panama Property Guide
- Casa Solution - Panama Mortgage Guide
- TheLatinvestor - Panama Price Forecasts