Panama Country Guide

Why Should I/We Buy in Panama

Buying property in Panama offers several compelling advantages for both investors and individuals seeking a new home or vacation retreat. Here are some key points on why you should consider buying property in Panama:

Attractive Investment Opportunities

  1. Growing Economy: Panama boasts one of the fastest-growing economies in Latin America, driven by the Panama Canal, logistics, banking, and tourism industries.
  2. Real Estate Appreciation: The real estate market in Panama has shown consistent growth, with property values increasing steadily over the years, especially in key areas.

Favorable Tax Environment

  1. Tax Incentives: Panama offers numerous tax incentives for property owners, including no capital gains tax on primary residences and property tax exemptions on new constructions for up to 20 years.
  2. Retirement Benefits: The Pensionado Program provides retirees with various benefits, including discounts on medical services, travel, and entertainment, making Panama an attractive destination for retirees.

High Quality of Life

  1. Modern Infrastructure: Panama City offers modern infrastructure, including high-quality healthcare, excellent private schools, shopping malls, and a well-developed transportation system.
  2. Diverse Natural Beauty: From pristine beaches on both the Pacific and Caribbean coasts to lush rainforests and highland areas, Panama offers diverse landscapes and outdoor activities.

Stable Political and Economic Environment

  1. Political Stability: Panama is known for its stable political environment and democratic government, which provides a safe and secure environment for property investment.
  2. U.S. Dollar: The official currency is the Balboa, but the U.S. dollar is widely used, providing economic stability and ease of transactions for foreign investors.

Ease of Property Purchase

  1. Foreign Ownership: Panama has no restrictions on foreign property ownership, allowing foreigners to buy and own property with the same rights as Panamanian citizens.
  2. Straightforward Purchase Process: The property purchase process in Panama is relatively straightforward and transparent, especially with the assistance of a local attorney and real estate agent.

Attractive Locations

  1. Panama City: A vibrant, cosmopolitan capital city with modern amenities, luxury high-rise condos, and a bustling nightlife. Ideal for those seeking an urban lifestyle with investment potential.
  2. Coronado and Gorgona: Popular beach towns offering a mix of expat communities, golf courses, and beautiful Pacific coast beaches. Suitable for both retirees and vacation homeowners.
  3. Boquete: A charming highland town known for its cool climate, coffee plantations, and stunning mountain views. It’s a popular destination for retirees and those seeking a tranquil lifestyle.
  4. Bocas del Toro: An archipelago on the Caribbean coast known for its crystal-clear waters, vibrant coral reefs, and laid-back island vibe. Perfect for those looking for beachfront properties and eco-tourism opportunities.

Growing Expat Community

  1. Welcoming Expat Community: Panama has a large and growing expat community, making it easier for newcomers to settle in and find support. There are numerous expat clubs, social events, and online forums to help you connect with others.

Residency Programs

  1. Friendly Nations Visa: Panama offers the Friendly Nations Visa, which provides an easy path to permanent residency for citizens of over 50 countries, including the United States, Canada, and many European nations.

Accessibility

  1. International Connectivity: Panama is a regional transportation hub with Tocumen International Airport offering direct flights to major cities in the Americas and Europe, making it easy for property owners to travel.

These factors make Panama an attractive destination for property buyers seeking a combination of economic growth, favorable tax conditions, high quality of life, and diverse living environments. Whether you’re looking for a solid investment, a retirement haven, or a new adventure, Panama has much to offer.

Buying Process in Panama

Buying property in Panama involves several steps and comes with various taxes and fees. Here are the key points on the buying process and associated costs:

Buying Process in Panama

  1. Property Search and Selection: Begin by researching and selecting the type of property you want in the preferred location. Utilize local real estate agents who are knowledgeable about the market and can help you find suitable properties.

  2. Hire a Lawyer: Engage a local attorney to assist with the legal aspects of the transaction. Your lawyer will perform due diligence, verify the property title, and ensure there are no outstanding liens or legal issues.

  3. Make an Offer: Once you find a property, make a formal offer to the seller. Negotiations may follow until both parties agree on the price and terms.

  4. Sales Agreement: A preliminary sales agreement (Promesa de Compra y Venta) is drafted, outlining the terms and conditions of the sale. This document is usually signed by both parties and a deposit (typically 10% of the purchase price) is paid.

  5. Due Diligence: Your lawyer will conduct thorough due diligence, including title search, verification of property boundaries, and checking for any legal encumbrances. This step is crucial to ensure the property is free of issues.

  6. Final Contract: Once due diligence is complete, the final sales contract (Escritura Pública) is prepared and signed by both parties in the presence of a notary public. The balance of the purchase price is paid at this stage.

  7. Property Registration: The notary will register the property transfer with the Public Registry (Registro Público), making you the official owner. This process can take a few weeks.

  8. Possession: Once the property is registered in your name, you take possession of the property.

Taxes & Fees

When buying property in Panama, you should be aware of the following taxes and fees:

  1. Transfer Tax: The property transfer tax is 2% of the greater of the purchase price or the registered value of the property.

  2. Notary Fees: Notary fees for drafting and signing the final contract typically range from 0.1% to 0.25% of the property’s purchase price.

  3. Registration Fees: The cost to register the property transfer with the Public Registry is approximately 0.2% of the property’s purchase price.

  4. Legal Fees: Legal fees for your lawyer’s services generally range from 1% to 2% of the purchase price, covering due diligence, contract preparation, and overall legal advice.

  5. Title Insurance: Although optional, title insurance is recommended and costs about 0.5% to 1% of the purchase price. It protects against title defects and ownership disputes.

  6. Escrow Fees: If you use an escrow service for the transfer of funds, expect to pay between $500 and $1,000, depending on the service provider.

Ongoing Costs

  1. Property Taxes: Property taxes in Panama are relatively low. Properties valued at up to $120,000 are exempt, while properties valued between $120,001 and $700,000 are taxed at a rate of 0.5% on the value exceeding $120,000.

  2. Homeowners Association Fees: If you buy a property in a gated community or condominium, there will be monthly or annual HOA fees, which vary depending on the services and amenities provided.

  3. Utilities and Maintenance: Regular costs for utilities (electricity, water, gas) and maintenance should be factored into your budget. These costs can vary based on property size and location.

  4. Insurance: Property insurance is advisable and typically costs around 0.2% to 0.3% of the property’s value annually.

Understanding these steps and associated costs will help ensure a smooth property purchase process in Panama. Engaging experienced local professionals, such as real estate agents and lawyers, is highly recommended to navigate the legal and logistical aspects effectively.

Popular Areas in Panama

Panama offers a diverse range of regions, each with unique attractions and benefits for property buyers. Here are some of the most popular areas for buying property in Panama:

Panama City

  • Location: Central Panama, along the Pacific coast.
  • Highlights: The capital and largest city, Panama City, is a vibrant metropolis with modern skyscrapers, shopping malls, and a bustling nightlife. It offers a mix of luxury condos, apartments, and commercial properties. The city’s well-developed infrastructure, including the Panama Canal, excellent healthcare facilities, and international schools, makes it ideal for investors and expatriates seeking an urban lifestyle.

Coronado and the Pacific Beaches

  • Location: Western Panama, along the Pacific coast, about an hour from Panama City.
  • Highlights: Coronado and surrounding beach towns like Gorgona, San Carlos, and Rio Hato are popular for their beautiful beaches, golf courses, and resort-style living. These areas attract retirees and expatriates looking for a relaxed beach lifestyle with modern amenities. Coronado, in particular, offers a range of properties from beachfront condos to luxury villas.

Boquete

  • Location: Chiriquí Province, in the highlands of western Panama.
  • Highlights: Known for its cool climate, stunning mountain views, and coffee plantations, Boquete is a favorite among retirees and those seeking a tranquil lifestyle. The town offers a variety of properties, from charming mountain homes to larger estates. Boquete is also famous for its outdoor activities, including hiking, birdwatching, and river rafting.

Bocas del Toro

  • Location: Northwestern Panama, on the Caribbean coast.
  • Highlights: The Bocas del Toro archipelago is renowned for its crystal-clear waters, vibrant coral reefs, and laid-back island lifestyle. Popular islands like Isla Colón and Isla Bastimentos offer a range of properties, from beachfront homes to eco-friendly developments. The area is ideal for those interested in eco-tourism, water sports, and a more relaxed pace of life.

Pedasí and the Azuero Peninsula

  • Location: Southwestern Panama, along the Pacific coast.
  • Highlights: Pedasí, a charming town on the Azuero Peninsula, is known for its traditional Panamanian culture, beautiful beaches, and sport fishing. The region offers a variety of properties, including beachfront lots, rural homes, and new developments. Pedasí attracts retirees, surfers, and those looking for a quiet, community-oriented lifestyle.

El Valle de Antón

  • Location: Coclé Province, in the central highlands of Panama.
  • Highlights: Situated in the crater of an extinct volcano, El Valle de Antón is known for its lush landscapes, cool climate, and biodiversity. The town offers a mix of properties, from charming mountain cabins to larger estates with expansive gardens. El Valle is popular for its outdoor activities, including hiking, birdwatching, and visiting waterfalls and hot springs.

David

  • Location: Chiriquí Province, western Panama.
  • Highlights: David is Panama’s third-largest city and a major commercial hub. It offers modern amenities, including shopping centers, hospitals, and schools. The city’s growing economy and infrastructure make it an attractive location for investors. Properties in David range from urban apartments to suburban homes.

Playa Venao

  • Location: Los Santos Province, on the Azuero Peninsula.
  • Highlights: Playa Venao is known for its stunning beach, excellent surfing conditions, and relaxed vibe. The area offers a mix of beachfront properties, eco-friendly developments, and vacation rentals. Playa Venao is popular among surfers, digital nomads, and those looking for a laid-back beach lifestyle.

Santa Catalina

  • Location: Veraguas Province, on the Pacific coast.
  • Highlights: A small beach town famous for its surf breaks and proximity to Coiba National Park, a UNESCO World Heritage site. Santa Catalina offers a range of properties, from beachfront bungalows to larger homes with ocean views. The area is ideal for surfers, divers, and nature enthusiasts.

Each of these areas in Panama offers unique benefits and lifestyles, making the country an attractive destination for property buyers. Whether you’re looking for a bustling urban environment, a tranquil mountain retreat, a vibrant beach town, or an eco-friendly island, Panama has something to offer for every taste and budget.

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