Q: Is it safe for foreigners to buy property in Panama?
A: Absolutely. Buying property in Panama is very safe. There are over a dozen laws in Panama established specifically for protecting foreign investments, not to mention that private property in Panama is protected by the constitution of the Republic of Panama. Thousands of foreigners own property in Panama, and we process Panama real estate transactions for foreigners every day without a problem.

Q: Is it legal for foreigners to buy property in Panama?
A: Yes, it is legal for foreigners to own titled property in Panama in their personal names, although we normally recommend that clients hold all property in the name of a Panamanian corporation for asset protection and income tax reasons. Panama “possession rights” (as opposed to titled) property, however, should always be held in the name of a Panamanian corporation, where the foreign person is the shareholder (or a Panama Foundation or trust can be appointed as the shareholder in place of the foreign person) of the Panama corporation.

Q: What are the procedures to buy real estate in Panama?
A: The first step is to find a Panama property you like, and negotiate the price and terms of the sale with the seller (or Panama real estate broker).

Second, you should seek a qualified attorney in Panama to handle the due diligence and title search on the property, putting your Panamanian attorney in contact with the seller (or real estate broker) to gather copies of the property title documents and survey (if available).

Third, have your attorney prepare a written Promise to Buy/Sell Contract to lock in the property sale and secure the terms agreed upon (a deposit of 10% is usually required by the seller upon signing the promise to buy/sell contract), plus this gives you time to do the due diligence and get your funds into the escrow account (see ).

Fourth, once the attorney has confirmed the property title is clean, then the final closing is scheduled, where the buyer/seller sign the final Buy/Sell Contract.

Fifth, payment is made to the seller, broker, and attorney from escrow (in some cases, buyers/sellers agree that payment is made after the public deed of the property is transferred and registered into the buyers name).

Sixth, the Buy/Sell Contract is registered at the Public Registry where they transfer the property title ownership from the previous owner to the new owner.

Q: Are there any government taxes or fees for transferring property titles from the sellers name to the buyers name?
A: Yes. The Panamanian government charges a 2% property title transfer tax. The 2% is based on the registered value (the value established in the registered deed of sale). In addition, there is a 3% advance of capital gains tax, based on the sale value. Plus, there are other fees charged by the Public Notary and the Public Registry. The notary fees range from $200 to $300. The Public Registry fees for registering a buy/sell contract for the sale of real estate in Panama will vary depending on the sale value.

Q: Who normally pays for the property title transfer tax in Panama, the buyer or the seller?
A: It is standard practice in Panama for the seller to pay for the 2% title transfer tax, and the 3% advance of capital gains tax, however, in some cases, this is open to negotiation.

Q: Who normally pays for the closing costs on Panama real estate transactions, the buyer or the seller?
A: Generally, each party pays for their own closing costs. For example, the seller pays his/her attorney to review the buy/sell contract, and the buyer pays his/her attorney for drafting the buy/sell contract, doing the title search, title transfer, and escrow services. However, in some cases, buyers and sellers negotiate special terms whereby the buyer or the seller pays all closing costs, so it really depends on the particular negotiation between buyer and seller.

Q: What are the average closing costs for Panama property transactions?
A: The closing costs vary depending on the particular transaction. Generally closing costs, excluding taxes, are approximately 2% of the sale value.

Q: How long does it normally take to register a property title transfer in the Public Registry of Panama?
A: In some cases, it can be done within 2 business days, if we pay extra for quick expediting. However, in normal circumstances, it takes from 1 to 3 weeks, depending on the volume of transactions at the Public Registry.

Q: How long does it normally take, from start to finish, to purchase property in Panama?
A: The time frame from start to finish is normally about 6 weeks, however, it really depends on a variety of factors which are dependent initially on the buyer and the seller, the negotiation between buyer and seller, and subsequently dependent on the attorneys and the public registry. Some transactions are handled in a few days, others take months.

Q: Do purchase contracts for Panama real estate transactions need to be in Spanish, in order for them to be legally enforceable in Panama?
A: No. The law does not require a buy/sell contract to be in Spanish to be legally enforceable, however, if there is ever a dispute over the transaction in a court of law in the Republic of Panama, then the court will require that the contract be translated to the Spanish language by an official (licensed) translator of that language. When we prepare buy/sell contracts, we always prepare the original in Spanish, and we provide our clients with an official English translation of the contract.

Q: What is normally accepted as a down payment for purchasing property in Panama?
A: Generally, sellers will accept 10% as a down payment upon signing the promise to buy/sell contract. The down payment is shown as “good faith” on behalf of the buyer, so that the seller knows that the buyer is serious. However, the down payment really depends on the particular transaction and the negotiation that takes place. We generally recommend that the buyer put 100% of the money in escrow, and then deliver an Irrevocable Payment Guarantee Letter from the Panama bank in favor of the seller, which stipulates that the seller will be paid once the property title is transferred – this is the safest option.

Q: Are there property taxes in Panama, if so, how much?
A: Property taxes are only levied on properties that have a registered value of US$30,000 or more (registered value is the value stated on the public deed that is registered at the Public Registry). The maximum annual property tax is 2.1% for any property valued above $75,000. For further information see our section on Panama Real Estate Taxes. Possession Rights properties do not incur property taxes, since the property technically belongs to the government of Panama.

Q: Are there property title transfer taxes in Panama?
A: Yes, the government of Panama charges 2% of the sales price. This is why most sophisticated investors utilize Panama corporations to hold ownership to property, so that when they sell the property, they simply sell the shares of the corporation as a whole, therefore avoiding the title transfer costs, avoiding the 2% title transfer tax, and avoiding the 3% advance of capital gains tax. However, when transferring the shares of a corporation that holds property, a 5% share transfer tax is applied.

Q: Are tax lien certificates available in Panama?
A: Yes, the Ministry of Economics & Finance of Panama issues what is called a “Paz y Salvo” that certifies that there are no taxes or tax liens on the property title.