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REAL ESTATE:
You may want to purchase real estate property in Panama we may assist you on the whole process in order for you to ensure that you are acquiring proper title and are in compliance with local regulations.
Real estate transactions in Panama are normally done in two steps: First you sign a Promise to Purchase and Sale Agreement and a down payment is given to the Seller as evidence of your commitment. If you decide not to proceed with the purchase, this down payment is normally relinquished to the seller. After the agreed time, the final Contract is made in the form of a public deed and registered at the Public Registry of Panama. As of the time of the registration, you become the owner. By far the safest possible way to pay the remainder of the purchase price to the seller is by an irrevocable letter of payment issued by a bank. The bank holding the funds issues the irrevocable letter of payment to the seller and pays it as soon as it is presented with the registered public deed transferring title to the buyer.
Unless specifically agreed otherwise, the seller pays the transfer tax (at 2% of the sales price or the updated value of the property, whichever is higher) and the buyer pays for the legal and registration costs.
Annual Property Tax:
An annual property tax is levied on all real estate properties in Panama (both land and improvements), under the following system:
Properties with a registered value of $30,000 or lower do not pay property tax.
For properties of higher value they pay as follows: 1.75% from $20,000 to $50,000; plus 1.95% from $50,000 to $75,000; plus 2.10% over any property value above $75,000. This is a combined scale. Up to December 2007, it is possible to go through a process that will result in a reduction of the property tax brackets to about half the above rate.
New houses or apartments for residential use, get a property tax exemption from that will vary depending on the date of their completion (contact us for further information). This exemption is transferable during the exemption period to any new buyer. The land itself is not exempted and would continue to pay property tax if its value is above $30,000.
Rights of Possession:
You may find property in Panama, specially in rural areas, that does not have title but is held under "rights of possession", which are a type of squatters rights. Although in some cases rights of possession may be converted to title, this is a lengthy process which may be subject to litigation from persons who deem have a better right.
We do not recommend the purchase of rights of possession. We recommend titles are searched before your sign any contracts or hand over any funds. The best way of knowing if a property is titled is to request that the seller gives you the registration details of the property (Finca or lot number and other data). We may carry out a search for you to determine if it is indeed registered.
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