What Expats Need to Know about Real Estate When Moving to Panama

Many people dream of moving to Panama to improve their quality of life, get access to more affordable healthcare, and to own their dream home. Foreigners can own property in Panama, although the process to secure the property of your choice is different than what you might be used to in your home country.

Real Estate Guidance for Expats in Panama

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Housing Purchase Process Overview

  1. Consider taking a discovery trip to Panama

  2. View listings and make a decision on where to buy

  3. Make an offer and negotiate with the seller until a price is agreed

  4. Engage a lawyer and draft a promissory contract

  5. Arrange a property survey by a licensed surveyor

  6. Sign promissory contract and send any down payment to seller

  7. Search and verify the title, and research encumbrances or other problems related to the property

  8. Sign the final deed and pay the balance on the purchase price

  9. Register the contract with the Public Registry for title transfer

  10. Attorneys receive final deed from Public Registry and prepare final documents (may take 2-30 days)

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Buying as an Individual or a Corporation

You can purchase property in Panama as an individual, as a corporation, or as a private interest foundation. Panamanian lawyers may recommend forming a corporation or foundation, largely to simplify estate planning. There are good reasons for this:

  • Probate: property held in an individual's name will go through probate in court, which is usually a long and costly process

  • Right of survivor-ship: This right does not exist in Panama. If a property is registered under more than one person's name, it does not automatically pass to the other owner(s) upon one owner's death.​

The U.S. has fairly onerous tax reporting requirements for Americans who are officers of foreign corporations. We recommend checking with a U.S. tax specialist before agreeing to create a corporation in Panama.

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Possession Rights

  • Not all properties have title deeds with the Public Registry Office. Some real estate, particularly in special tourism zones, only offer "possession right" or "limited ownership" instead of a title

  • Rights of Possession property is exempt from property tax

  • These types of property typically have lower market prices than titled property because of the higher investment risk

  • Purchasing this type of property requires more careful due diligence by a trusted attorney. You'll want to be very careful that possession is awarded by relevant government authorities.

  • Many properties in Bocas del Toro falls into this category

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Expected Fees

For buyers

  • Legal fees (including notary and public registry): typically 2%

  • (optional) incorporation fee if you buy as a Panama corporation: ~$1,000

For sellers:

  • Real estate agent's fees: 5%

  • Transfer tax (for individuals): 2%

  • Capital gains tax (for individuals): 3% of sales price or 10% of gain

  • Share transfer tax (for corporations): 5% of sales priceerty Purchase Fees

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Inheritance

Inheritance proceedings regarding local property are dealt with in Panama. You may have any will made outside of Panama authenticated, legalized, and translated, but it is often easier to make a formal will in Panama to cover assets within the country. Regardless of having a will, in Panama probate will always go through the courts, which can be a lengthy and costly process. Many people also use corporations or private interest foundations to protect their assets (see the real estate section above). There is also no right of survivor-ship in Panama, meaning that the death of one owner of a property does not automatically result in ownership being passed to other owners.

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Important things to be aware of

  • There are financing opportunities for foreigners buying property in Panama, although they will differ from opportunities for locals. For example, foreigners must usually meet a 30% down payment rather than the 10% typically required for Panamanians.

  • Panama does not have a MLS (central database of property for sale), so it can be difficult to compare home values during the search process and searching can be fragmented. Working with a vetted buyer's agent can give you more confidence during the process.