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
Buying property in Panama as a foreigner is remarkably straightforward compared to many other countries.
Panama offers foreigners nearly the same property ownership rights as locals, with no residency requirements for most purchases. The process is well-established, and the country actively welcomes foreign investment in its real estate market, making it an attractive destination for both lifestyle purchases and investment 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.
Foreigners can buy property in Panama with nearly identical rights to locals, requiring no residency or special visa for most purchases.
The buying process involves standard steps including due diligence, legal representation, and property registration, with total costs typically ranging 3-5% of property value.
| Key Aspect | Details | Cost/Requirement |
|---|---|---|
| Ownership Rights | Same as locals (except border areas) | No restrictions |
| Residency Required | No | None |
| Physical Presence | Not required (Power of Attorney possible) | Optional |
| Transfer Tax | 2% of sale price or cadastral value | Usually seller pays |
| Legal Representation | Mandatory (strongly recommended) | $1,500-$3,000 |
| Mortgage Availability | Yes, 30-40% down payment | 7-9% interest rates |
| Property Tax | 0-1% annually | Exemptions up to $120,000 |
Can foreigners buy property in Panama as easily as locals or are there restrictions?
Foreigners can buy property in Panama with nearly identical rights to Panamanian citizens.
The Panamanian Constitution guarantees property ownership rights to foreigners, allowing them to purchase both residential and commercial titled properties. There are only two main restrictions: foreigners cannot own land within 10 kilometers of international borders and certain indigenous territories are off-limits to foreign ownership.
Beachfront properties are available for purchase, but buyers should understand that the first 22 meters from the high tide line remain public domain and cannot be privately owned. This applies to both locals and foreigners equally.
You should avoid properties offered under "Right of Possession" (ROP), which do not have secure titles and can lead to legal complications. Always ensure you're purchasing titled property with clear ownership documentation.
It's something we develop in our Panama property pack.
Do I need residency or a specific visa to purchase property in Panama?
No residency or special visa is required to purchase property in Panama as a foreigner.
You can buy property in Panama on a tourist visa or any other legal status. The Panamanian government actively encourages foreign investment in real estate and has made the process accessible regardless of your residency status.
While residency isn't required for purchasing, having permanent residency can offer advantages when applying for mortgages, as banks typically offer better terms to residents including higher loan-to-value ratios and lower interest rates.
The only requirement is that you obtain a RUC (tax identification number) from the DGI (tax authority), which is a simple process that can be completed quickly with your passport and basic documentation.
Is it necessary to be physically present in Panama to complete a property purchase?
Physical presence in Panama is not required to complete a property purchase.
You can purchase property remotely by granting Power of Attorney to a trusted representative, typically a local lawyer who will act on your behalf throughout the transaction. This allows you to complete the entire buying process from abroad.
However, a site visit is strongly recommended for due diligence purposes. Seeing the property in person, understanding the neighborhood, and meeting local professionals can help you make a more informed decision and avoid potential issues.
If you choose to proceed remotely, ensure your Power of Attorney is properly drafted and notarized, and that you have complete trust in your representative. All major documents will need to be translated and properly authenticated.
What are the step-by-step procedures and documents required to buy real estate in Panama?
1. **Property search and selection** - Work with a reputable real estate agent to identify suitable properties2. **Hire a local attorney** - Essential for legal protection and due diligence3. **Due diligence phase** - Attorney conducts title search, reviews tax status, and checks for liens or encumbrances4. **Promise to purchase/sell contract** - Sign "Promesa de Compraventa" with typically 10% deposit5. **Arrange financing** - Apply for mortgage if needed (30-45 day process)6. **Final payment** - Complete payment upon fulfillment of contract terms7. **Public deed preparation** - Draft and review final transfer documents8. **Notarization** - Sign public deed at notary's office with all parties present9. **Registration** - Register deed at Public Registry to officially transfer ownership10. **Obtain clearances** - Get municipal permits and tax clearances for final registration| Document | Purpose | Source |
|---|---|---|
| Property Title | Proves legal ownership | Current owner/Public Registry |
| Property Survey | Confirms boundaries and dimensions | Licensed surveyor |
| Certificate of Good Standing | Verifies no tax debts | Municipality |
| Public Registry Certificate | Shows property history and encumbrances | Public Registry |
| Paz y Salvo | Tax clearance certificate | Tax authority (DGI) |
| Municipal Permits | For new and improved properties | Local municipality |
| Passport and RUC | Buyer's identification | Buyer/DGI |
Is hiring a local lawyer mandatory or just recommended for foreigners buying property?
Hiring a local attorney is mandatory in practice, though not technically required by law.
A qualified Panamanian lawyer is essential for protecting your interests throughout the transaction. They perform comprehensive due diligence, including title searches, tax verification, and checking for any liens or legal encumbrances on the property.
Your attorney will draft and review all legal documents, ensure compliance with Panamanian property laws, and represent you during the closing process. They also help navigate the bureaucratic requirements and ensure proper registration of your ownership.
Legal fees typically range from $1,500 to $3,000 depending on the property value and complexity of the transaction. This investment is crucial for avoiding costly mistakes that could result in the loss of your property or significant financial damages.
Choose an attorney who specializes in real estate law and has experience working with foreign buyers. Ask for references and ensure they are properly licensed to practice in Panama.
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What are the taxes, fees, and additional costs involved in both buying and reselling a property?
Property transactions in Panama involve several taxes and fees that buyers should budget for when planning their purchase.
The main transfer tax is 2% of the higher of the sale price or cadastral value, typically paid by the seller but negotiable. Notary and Public Registry fees add approximately 0.5-1% of the property value.
Additional costs include real estate agent commissions (usually 3-6%), attorney fees ($1,500-$3,000), document translation and certification fees, bank fees if using a mortgage, property appraisals, and municipal certificates.
Annual property tax ranges from 0-1% of the property value, with exemptions up to $120,000 for primary residences and special incentives for new properties. When reselling, you'll face similar costs plus capital gains tax of 10% on net gains or 3% of the sale price as an advance payment.
Total transaction costs typically range from 3-5% of the property value for buyers, making it important to factor these into your budget alongside the purchase price.
Are mortgages available to foreigners, and what are the typical interest rates, conditions, and tips to qualify?
Mortgages are available to foreigners from Panamanian banks, though terms are stricter than those offered to local residents.
Foreign buyers typically need to provide 30-40% down payment (sometimes up to 50%), compared to 20-30% for locals. Interest rates for foreigners range from 7-9%, while locals can secure rates between 4.5-7%.
Loan terms are usually limited to 15-25 years for foreigners versus up to 30 years for residents. The loan-to-value ratio is typically capped at 50-70% for non-residents.
To qualify, you'll need strong proof of foreign income, credit reports from your home country, a local bank account, certified translations of all documents, and life insurance may be required. The application process takes 30-45 days on average.
Major banks offering mortgages to foreigners include Banco General, Banistmo, Global Bank, BAC Credomatic, and Scotiabank. Having permanent residency significantly improves your terms and available options.
It's something we develop in our Panama property pack.
Which areas in Panama are most popular with foreigners for living, renting out, or long-term investment?
Panama City leads as the most popular destination for foreign property buyers, offering the best combination of rental yields, infrastructure, and resale potential.
Casco Viejo, the UNESCO World Heritage historic district, attracts investors seeking strong short-term rental demand and capital appreciation. Costa del Este serves as an upscale expat enclave with luxury properties and high rental yields.
Boquete remains the top choice for retirees, offering a mountain climate, established expat community, and steady property appreciation. The area provides excellent livability with lower costs than beach locations.
Beach destinations like Coronado, Playa Bonita, and Playa Blanca appeal to lifestyle buyers and vacation rental investors. Bocas del Toro and PedasĂ offer emerging opportunities with growing tourism demand.
Each area serves different investment strategies: Panama City for rental income and growth, Casco Viejo for tourism rentals, Boquete for retirement living, and beach areas for vacation properties and capital appreciation.
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.
Where are the best regions for rental yields, tourism demand, livability, and long-term capital appreciation?
Panama City offers the highest rental yields at 5-8% annually, driven by strong demand from business travelers, expats, and local professionals.
For tourism demand, Casco Viejo leads with its UNESCO status attracting international visitors year-round. Beach destinations like Coronado and Playa Bonita show strong seasonal rental demand, particularly during North American winter months.
Boquete provides the best livability for expats, with its temperate climate, established infrastructure, healthcare facilities, and English-speaking services. The area offers a lower cost of living while maintaining modern amenities.
Long-term capital appreciation varies by location: Panama City shows steady 1-5% annual growth, Costa del Este demonstrates 5-8% growth in the luxury segment, and Boquete has averaged 5% annual appreciation as the retiree market expands.
Beach markets like Coronado show more volatile but potentially higher returns, while emerging areas like PedasĂ offer early-stage investment opportunities with significant upside potential as tourism infrastructure develops.
What is the current breakdown of property prices across major cities and regions in Panama?
| Location | Apartment Price per m² | House Price per m² | 2025 Trends |
|---|---|---|---|
| Panama City | $2,506 | $1,628 | +1% steady growth |
| Costa del Este | $2,055 | N/A | +5-8% luxury segment |
| Boquete | $3,090 | $1,923 | +5% retiree demand |
| Coronado | $2,000-$3,000 | $180,000+ per home | Beach lifestyle market |
| Punta Chame | $3,200 | $1,896 | Upscale beach area |
| Other Beach Towns | $1,500-$2,500 | $1,200-$1,900 | Resort/tourism areas |
| Panama City Average | $337,645 per home | N/A | Buyer's market discounts |
What are the common mistakes and pitfalls foreigners face when purchasing property in Panama?
1. **Buying Right of Possession (ROP) properties** - These untitled properties carry significant legal risks and potential total loss of investment2. **Skipping independent legal representation** - Relying on seller's attorney or none at all leads to costly oversights3. **Inadequate due diligence** - Failing to verify clear titles, tax status, or boundary issues before purchase4. **Overpaying due to pressure tactics** - High-pressure sales from "finders" or unscrupulous agents targeting foreigners5. **Underestimating total costs** - Not budgeting for transaction fees, taxes, and ongoing expenses6. **Language barriers** - Not translating and fully understanding legal documents before signing7. **Ignoring local regulations** - Overlooking building codes, HOA rules, or municipal requirements8. **Rushed timeline expectations** - Not allowing sufficient time for proper legal and financial processesThe most critical mistake is purchasing property without proper title verification. Always insist on titled property with clear ownership documentation and avoid any properties offered under Right of Possession arrangements.
Working with experienced, independent professionals including attorneys, agents, and property inspectors provides essential protection against these common pitfalls that can result in significant financial losses.
What are the fiscal implications for foreigners owning property, including income tax on rentals and capital gains tax on resale?
Panama uses a territorial tax system, meaning only income generated within Panama is subject to local taxation.
Rental income from Panamanian properties is taxed under the country's progressive tax system: 0% on income up to $11,000, 15% on income from $11,001 to $50,000, and 25% on income above $50,000 annually.
Capital gains tax applies at a flat rate of 10% on net profits when selling property. Alternatively, sellers can choose a 3% withholding tax on the higher of the sale price or assessed value, with differences reconciled after the sale.
Annual property taxes range from 0-1% based on property value and usage, with exemptions up to $120,000 for primary residences. Foreign income is not taxed in Panama, making it attractive for international investors.
US citizens must report worldwide income to the IRS as Panama has no double taxation treaty with the United States. Proper tax planning and professional advice are essential for optimizing your tax obligations across jurisdictions.
It's something we develop in our Panama property pack.
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.
Buying property in Panama as a foreigner offers excellent opportunities with straightforward legal processes and strong investment potential.
Success depends on proper legal representation, thorough due diligence, and understanding both the opportunities and responsibilities of Panamanian property ownership.
Sources
- Taxes for Expats - Panama Property Guide
- Panama Sovereign - Real Estate Laws
- Global Property Guide - Panama
- The LatinVestor - Panama Real Estate for Foreigners
- NTL Trust - Panama Residency
- The LatinVestor - Foreigners Buy Land Panama
- Limitless Legal - Panama Real Estate Investment
- Limitless Legal - Ultimate Guide
- Kraemer Law - Purchase Sale Process
- Casa Solution - 2025 Guide