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Panama is going through a real estate boom which has increased the number of real estate transactions in the last five years. Hence, the country is growing to be home to a multicultural blend of young people and retirees who enjoy the high quality of life and friendly environment that the country has to offer. Panama has recorded a fast growth in terms of population, tourism, foreign investment and new real estate constructions during the last ten years. It is one of the countries in Latin America that is open to foreign real estate investment by allowing citizens of any country to hold ownership of property. It is important to note that buying real estate in Panama is safe and easy – foreigners enjoy the same property rights as Panamanians. There are attractive neighborhoods in Panama City, offering the types of real estate properties that most people would be very happy to call home.

U.S. business magazine, Fortune as well as the International Living’s Global Retirement Index has ranked Panama within the top best places in the world to retire. Among the factors that have placed Panama at the top are the low cost of living, safety and stability, health care, good weather, special benefits for retirees, affordable real estate prices, diverse culture and great entertainment.

The special benefits for retirees in Panama are established in Law No. 6 of 1987 and its amendments. The following are some of the benefits Panama offers to retirees:
  • Tax exemption on the import of one car every two years and household goods worthup to $10,000
  • Tax exemption on home furnishings,
  • Property tax exemption if the only property the client owns is located in Panama,
  • Discount of 50% on recreation activities, such as, movies, sports events, ballet, parks,
  • Discount of 10% on prescribed drugs,
  • Discount of 25% on airfares,
  • Discount of 30% on Public transportation,
  • Discount of 25% on the value of the food consumed individually at any restaurant,
  • Discount of 15% on fast food service restaurants, with national and international franchises,
  • 20% off Medical services, and professional and technical services,
  • 25% off utility bills (electricity, water, cable and telephone),
  • Discount of 15% on the maximum interest rate that banks and financial institutions charge for personal and commercial loans,

Some of the Tax Incentives to Investments in Real Estate are:
  • Up to 20-year exemption of property tax on the value of buildings and improvements,
  • Banks granting residential mortgages for new residences below $62,5000 receive a negotiable tax credit equivalent to interest reduced by two (2) to four (4) points below the prevailing rate,
  • The amounts paid as interest for mortgages are deductible from taxable income,
I. Buying a Property in Panama

It may happen that the client has never bought a property in Panama; therefore he may have many questions regarding administrative and legal procedures. In order to help the client to understand the process in which he will be immersed, the following are the usual steps that need to be taken to purchase a property in Panama:

  • Find a property through either a real estate broker or directly with the owner through newspapers and ads,
  • Once the property is found, negotiate the price and terms of the sale with the seller,
  • It is highly recommended to hire a Panamanian lawyer to do the title search on the property, get in touch with the seller, negotiate the contract, gather the documents regarding the property, and prepare all the legal documentation to close the deal, such as Promise to Purchase Agreement and Purchase Contract,
  • The Purchase Contract should be signed by the parties in order to be registered afterwards at the Public Registry through a Public Deed. This will be done once the attorney has confirmed that the title of the property is clean,
  • The registration of the abovementioned Public Deed at the Public Registry is a necessary step in order to transfer the ownership of the property from the previous owner to the new owner,
  • The payment is made to the seller, broker or seller’s attorney after the Public Deed containing the Purchase Contract is registered and transferred to the buyer,
Buying a property in Panama can be done through different ways:
  • Purchase of a titled property, or by,
  • Acquisition of a possession right over a property. This applies to lands located in historical places, beach front lands, islands or real estate in tourism zones such as Bocas del Toro and Portobelo in the Atlantic Coast.
II. Financing a Property in Panama

Since Panama has become a great spot for foreigners to either invest, relocate or retire, the banking sector has been forced to improve its policies and programs in order to facilitate the commercial activity in the country.

Panama’s banking sector has established attractive financing options for foreigners to purchase properties. Financing in the U.S. is different than in Panama. Whereas, in the U.S. everything depends on your credit history in Panama banks institutions will emphasize in your income sources, capacity to pay and property’s loan to value ratio. Therefore, banks will require all kind of documentation to prove the person’s income and the value of the property to be purchased.

Following is a list of some of the documents a bank will require in order to provide financing:
  1. Copy of your entire passport
  2. Copy of Driver’s License or another I.D.
  3. Utility Bill showing your name and address
  4. Two (2) bank reference letters
  5. Two (2) professional or commercial reference letters
  6. Copy of bank statements for the last year or two years
  7. Professional Resume
  8. Last two (2) years tax returns or financial statements
  9. Appraisal of the property
  10. Title of the property
  11. Letter explaining the source of your incomes and the purpose of the property purchase
  12. Application to mortgage duly completed and signed
We recommend the client to visit several banks or consult with a local professional before applying to a mortgage. The more the client researches the more safe will be the investment.

III. Relocating to Panama

Relocating to Panama is relatively easy when you have support from a well established and trustable company which provides effective services in all aspects. Mauad & Mauad will make your relocation process easier and simple through the advice and assistance on several major aspects from international relocation agency. We have a strategic alliance with a known international relocation agency. With presence in Panama that enables us to assist the client in housing, automobiles, schools and other matters related to their relocation and residency in the country.

Following are Panama Basics which are important facts you may take in consideration:
  • Offshore haven,
  • Foreign source income is not taxable,
  • Flexible corporate structures for protection of assets,
  • U. S. Dollar based economy and stable political situation,
  • International banking center with 90 banks,
  • Second largest Free Trade Zone in the world and the Panama Canal,
  • Retiree incentive program with numerous benefits,
  • Tax exemptions for 20 years applies to all new construction of properties,
  • Fiber optic communication system,
  • Cruises ports and marinas in the Pacific coast and Atlantic coast,
  • Cosmopolitan modern metropolis,
  • English-speaking professionals all over the country,
  • Incentives and benefits for tourism investments

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NOTE: The information herein provided could have varied due to recently approved regulations. Therefore, we suggest you contact our office for a formal legal opinion.

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