Buying real estate in Panama as a foreigner?

We've created a guide to help you avoid pitfalls, save time, and make the best long-term investment possible.

Buying property in Panama as a foreigner: a full guide

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buying property foreigner Panama

Everything you need to know is included in our Panama Property Pack

Panama is a top pick for foreigners who want to invest in real estate. It offers stunning landscapes, a vibrant culture, and welcoming locals.

However, buying property in a foreign country can be complicated, especially with all the laws and regulations involved.

Don't worry! This guide is here to make it easy for foreign buyers to understand how the property market works in Panama. We'll cover everything you need to know in a straightforward and simple manner.

Also, for a more in-depth analysis, you can check our property pack for Panama.

Can you purchase and own a property in Panama as a foreigner?

If you are American, we have a dedicated blog post regarding the property buying and owning process in Panama for US citizens.

Yes, foreigners can buy property in Panama.

Buying real estate in Panama as a foreigner is quite straightforward and similar to the process and rights enjoyed by locals. This welcoming approach to foreign investment in property makes Panama an attractive destination for those looking to invest in real estate abroad.

First and foremost, foreigners have the same rights as Panamanian citizens when it comes to buying and owning property.

You are allowed to own land and property outright, which is known as "Fee Simple" ownership. This is quite a significant point, as it's not always the case in other countries, where foreign buyers may face restrictions or can only lease land.

However, there are special regulations concerning properties located in coastal areas, particularly beachfront properties (more below).

There are no specific differences in property rights based on your country of origin. Whether you're from North America, Europe, Asia, or any other region, the process and your rights remain the same. This equal treatment is part of Panama's commitment to encouraging international investment.

Regarding visas and permits, you don’t need a specific type to buy property in Panama. Actually, you do not need to reside in Panama to buy property. Many foreign investors purchase homes or land as an investment, for vacation purposes, or for future retirement without living there full-time. This flexibility is a big draw for international buyers.

There's no specific government authorization needed just for the purpose of buying property. However, like any property purchase, the transaction must go through the normal legal channels to ensure everything is legally in order. This process typically involves lawyers and real estate agents to ensure compliance with all local laws and regulations.

Finally, Panama doesn't mandate a minimum investment for buying property. This aspect is quite investor-friendly, as it allows for a wide range of investment sizes, from small apartments to large estates.

Purchasing property along the coastline in Panama

In Panama, these areas are often governed by a system known as "Concession" or "Rights of Possession."

Unlike the Fee Simple ownership we mentioned earlier, where you own the property outright, Concession properties are essentially leased from the government.

For beachfront and other coastal properties, the Panamanian government often retains ownership of the land, and individuals or entities can apply for a concession to use the land.

These concessions are typically granted for a specific period, such as 20 years, and can be renewed. It's important to understand that while you can build on and use the land, the underlying ownership remains with the state.

When buying property in these areas, it's crucial to check the status of the land. Is it a concession property, or is it Fee Simple? The type of ownership will affect your rights and responsibilities as an owner.

For example, with concession properties, there might be specific requirements or restrictions set by the government, such as environmental regulations or development limitations.

Also, it's worth noting that within a certain distance from the high tide line, usually the first 200 meters, there are often additional restrictions.

This area is typically considered public zone and is not available for private ownership, although concessions for commercial use can sometimes be granted.

Can you become a resident in Panama by purchasing and owning a property?

Yes, Panama does offer a pathway to residency through real estate investment, known as the Panama Friendly Nations Visa.

This program is particularly attractive for those looking to gain residency in a country with a stable economy and beautiful natural scenery.

Here's how it works.

Firstly, the Panama Friendly Nations Visa allows individuals from a list of designated 'friendly' countries to gain residency through various means, including real estate investment.

Countries such as the United States, Canada, most of the EU countries, Australia, New Zealand, Japan, South Korea, and several Latin American nations are part of this list.

If you're from one of these countries, you're eligible to apply.

Regarding the investment in real estate, there's a minimum requirement. You need to invest at least $300,000 in Panamanian real estate. This investment amount is key to qualifying for the program. It's important to ensure that the property you invest in meets this threshold.

As for the steps involved, the process begins with finding and purchasing suitable property in Panama. Once you've made the investment, you'll need to gather various documents, such as proof of investment, a clean police record, and a health certificate. It's crucial to have all your paperwork in order, as any missing documents can delay the process.

Regarding the residency status, once your application is approved, you will initially receive temporary residency. This temporary status is typically valid for two years.

After this period, you can apply for permanent residency, which is a significant benefit of this program. Permanent residency means you can live in Panama indefinitely, as long as you maintain the investment.

Finally, obtaining permanent residency through real estate investment in Panama does open the path to citizenship. After five years of permanent residency, you can apply for citizenship, provided you meet other requirements, like basic proficiency in Spanish and an understanding of Panamanian culture and history.

What does the real estate market looks like in Panama?

Market data

You can find fresh and updated data in our pack of documents related to the real estate market in Panama.

The real estate market in Panama is currently experiencing a vibrant and dynamic phase, attracting a wide array of international buyers. This surge in interest can be attributed to several unique strengths and characteristics that Panama offers.

One of the most distinct features of Panama's real estate market is its offering of properties with ocean views on both the Pacific and Atlantic coasts.

This is a rarity, as few countries in the world can boast coastlines on two major oceans with real estate opportunities on both. The allure of having a property where you can enjoy sunrises on one coast and sunsets on the other is a unique proposition that Panama uniquely offers.

Foreign investors are particularly drawn to Panama for several reasons. The country's strategic location as a global shipping and air travel hub makes it an accessible destination. Moreover, Panama uses the U.S. dollar, providing a stable currency environment which is appealing to international buyers.

Additionally, the Panamanian government has established favorable policies for foreign investors, such as property tax exemptions and residency programs, making it an attractive destination for expatriates and retirees.

The type of people looking to buy in Panama varies. The market sees a mix of retirees seeking a peaceful, cost-effective lifestyle, business professionals drawn by the thriving economy, and investors seeking lucrative real estate opportunities. Panama's cosmopolitan capital, Panama City, offers a blend of modern amenities and rich cultural experiences, further enhancing its appeal.

A unique aspect of properties in Panama, particularly in Panama City, is the integration of lush green spaces within urban developments. This design approach, blending urban living with nature, is not just aesthetically pleasing but also enhances the quality of life for residents, a feature that is increasingly sought after in urban real estate.

Backing the dynamic nature of the market, one significant data point is the steady increase in property values in Panama City, especially in sought-after areas like Punta Pacifica and Costa del Este. This upward trend is a testament to the growing demand and robustness of the market.

Looking to the future, several factors indicate that properties in Panama will continue to gain in value. The ongoing expansion of the Panama Canal is a significant growth driver, boosting the economy and increasing demand for residential and commercial properties.

Additionally, Panama's growing reputation as a tourist destination and a business hub in Latin America ensures a continuous influx of foreign interest. The government's commitment to infrastructure development, including transportation and urban renewal projects, further bolsters the real estate market's potential for growth.

To know more, you can also read our dedicated article: is it a good time to buy a property in Panama?

The expat life

Living as an expat in Panama can be an incredibly rewarding experience. The country has a strong sense of community and a vibrant culture that is sure to be an enriching experience. The people of Panama are warm and welcoming to foreigners, and the country has a variety of activities to offer.

The climate in Panama is generally tropical, with temperatures ranging from hot and humid in the summer to mild and dry in the winter. This makes it an ideal place to escape the cold of winter and experience the beauty of the Caribbean. The country also has a range of natural wonders, from mountains and jungles to beaches and islands.

The cost of living in Panama is relatively low, making it an attractive destination for expats. The country also has a strong economy and a stable political system, meaning that it is a safe place to live. There is also a wide range of job opportunities available in Panama, making it easy for expats to find work.

The lifestyle of an expat in Panama can be incredibly rewarding. The country is full of opportunities to experience new cultures, meet new people, and explore the natural wonders of the country. With its low cost of living and stable political system, Panama is an ideal destination for expats looking for a new home.

What are the best places to invest in real estate in Panama?

This table summarizes some of the best places to buy a property in Panama.

City / Region Population Average Price per sqm (USD) Strengths
Panama City ≈ 1.5 million 1,500 - 3,000 Financial center, modern infrastructure, cosmopolitan lifestyle
Bocas del Toro ≈ 20,000 800 - 1,500 Tropical islands, Caribbean beaches, water sports
Boquete ≈ 20,000 1,000 - 2,000 Mountain town, cool climate, coffee plantations
David ≈ 150,000 500 - 1,000 Commercial center, affordable living, proximity to beaches
Coronado ≈ 10,000 1,000 - 2,000 Beach resort area, golf courses, expat community
Volcán ≈ 8,000 500 - 1,000 Rural town, scenic beauty, hiking, natural hot springs
Las Tablas ≈ 10,000 500 - 1,000 Folklore traditions, festivals, colonial architecture

Do you need a lawyer to buy real estate in Panama?

When purchasing a property in Panama, engaging a local lawyer can provide valuable assistance in navigating the legal aspects and ensuring a successful transaction.

One crucial document they can help you with is the Purchase-Sale Agreement (Contrato de Compraventa), a legally binding contract between the buyer and seller that outlines the terms and conditions of the sale.

The Panamanian lawyer can also assist with conducting a Property Title Search (Búsqueda de Titulo de Propiedad) to verify the property's ownership status and identify any potential legal issues or encumbrances.

Moreover, they can guide you through the process of obtaining necessary permits and approvals, such as approval from the local Land Registry Office or relevant authorities.

They will ensure that all applicable taxes and fees, such as the Property Transfer Tax and Notary Fees, are paid correctly and in compliance with Panamanian laws and regulations.

What are the risks when purchasing a property in Panama?

We've got an article dedicated to the risks associated with purchasing property in Panama.

While Panama has its advantages for real estate investment, there are several potential pitfalls to watch out for.

These include scams like multiple sales of the same property, disputes over beachfront property rights, and complex land ownership concepts like 'Right of Possession' (ROP).

Additionally, the legal system can be slow, and zoning laws can vary by area.

You can read our full article about the risks when buying in Panama.

Make sure to do thorough due diligence, work with a local attorney, and understand the local regulations before making any property purchases in Panama.

real estate Panama

Everything you need to know is included in our Panama Property Pack

What are the documents needed for a real estate transaction in Panama?

When buying a property in Panama, the documents that you will need to provide include:

• Copy of the buyer’s passport or official ID
• Copy of the seller’s passport or official ID
• Title deed of the property
• Tax documents
• Receipts from the payments made for the property
• Appraisal of the property
• Notarized contract
• Contract of sale
• Appraisal report
• Tax assessment report
• Bank reference letter
• Letter of employment
• Proof of funds
• Power of Attorney (if applicable)
• Copy of the property surveys

We review each of these documents and tell you how to use them in our property pack for Panama.

How should you approach negotiations with individuals from Panama?

When negotiating to purchase a property in Panama, it is important to understand and appreciate Panamanian culture, which is influenced by a blend of indigenous traditions, Spanish colonial heritage, and a diverse multicultural society.

Panamanian society places great importance on respect and building personal relationships. It is advisable to approach negotiations with a respectful and considerate attitude, taking the time to establish a genuine connection with the local seller. For instance, demonstrating an interest in Panamanian traditions and asking about their family and background can help foster a positive rapport.

Open and honest communication is highly valued in Panamanian culture. It is essential to clearly and transparently communicate your intentions, expectations, and the terms of the sale. Directness and clarity are generally appreciated. Additionally, Panamanians value a friendly and amicable negotiation process, so maintaining a pleasant demeanor and avoiding confrontational tactics can be beneficial.

During negotiations in Panama, it is common for personal relationships to play a significant role. Building trust and establishing a genuine connection can influence the outcome of the negotiation. Taking the time to socialize and engage in small talk can help create a comfortable atmosphere.

Familiarizing yourself with the local real estate market and legal procedures is essential. Conduct thorough research on property laws, regulations, and any associated costs such as taxes, fees, and maintenance expenses. This knowledge will empower you during negotiations and ensure a smooth transaction. Additionally, understanding the current market trends and property values in different regions of Panama can give you an advantage during negotiations.

Lastly, embracing Panamanian culture and customs can create a positive impression. Showing an interest in the country's rich cultural heritage, such as its traditional dances, music, and cuisine, can help build rapport with the seller. Attending local festivals like the Carnival of Panama or exploring indigenous communities can also demonstrate your appreciation for Panamanian culture.

Do banks offer loans to foreigners in Panama?

Yes, foreigners can obtain property loans in Panama. ThePanamanian banking system allows non-residents to apply for property loans, subject to certain conditions and requirements.

As a foreigner seeking a property loan in Panama, it is generally necessary to have a valid residence permit, demonstrate stable income, and meet the lending institutions' specific criteria.

Some banks in Panama that can grant mortgages to foreigners include Banco General, Banistmo, and Scotiabank Panama.

Moreover, mortgage rates in Panama for a 20-year term range from 4% to 8%, which are exceptionally favorable.

What are the taxes related to a property transaction in Panama?

Here is a breakdown of taxes related to a property transaction in Panama.

Tax Description Calculation Who pays
Rental Income Tax Tax on rental income generated from the property From 15% to 25% on the gross rental income Owner
Transfer Tax A tax on the transfer of real estate property 2% of the property value or sale price Seller
Capital Gains Tax A tax on the profit earned from the sale of a property 10% on the net capital gains (difference between sale and cost prices) Seller
Property Tax An annual property tax paid to the municipality A progressive rate of 0% to 1% depending on the property value Owner

What fees are involved in a property transaction in Panama?

Below is a simple breakdown of fees for a property transaction in Panama.

Fee Description Calculation Who pays
Legal Fee Legal fees for assistance in the property transfer Around 2% of the property value Buyer
Real Estate Agent Fee Fee paid to the real estate agent involved in the transaction Between 3% and 5% of the property sale price Seller
Registration Fee Fee for registering the property transfer Usually around 0.3% of the property value or sale price Buyer
Notary Fee Fee charged by the notary public for legalizing and recording the property transfer Typically 1% of the property value or a fixed amount Buyer

Buying real estate in Panama can be risky

An increasing number of foreign investors are showing interest in Panama. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.

buying property foreigner Panama