Panama´s Real Estate Facts

  1. Why Invest in Panama Real Estate?

    Panama’s favourable economic development has been triggered by the fact that it is the fastest growing tourism market in South America and the second largest banking sector in the world. The expansion of the Panama Canal and its Colon Free Trade Zone are also significant in Panama’s success. These factors are currently precipitating significant growth in the real estate sector and offering investors prime opportunities to supply the huge demand for both commercial and residential property in Panama.

    Panama continuous non-stop real estate boom has been since 2005. Despite the worldwide economic slowdown, the sector hasn’t been affected, and Panama’s economy remains as one of the strongest in all of Latin America.

  2. Real Estate Investment Options

    Panama Real Estate sector offers proprieties for all likes and choices. From modern and sophisticated properties in the city center to beautiful front beaches houses and condominiums, and peaceful mountain logs, Panama real estate sector can fulfil any real estate investor desires.

    Tourism has been rising by an annual average of 10% since 2005. The government of Panama has identified various parts of the country as ‘Special Tourism Zones’ which offer benefits and tax incentives such as:

    • Property and land tax exemption
    • Income tax exemption for 15 years
    • 20 years import and sales tax exemptions
    • 20 years income tax exemption for tourism activity investment
  3. Annual property capital appreciation of up to 20% and rental yields of approximately 8% make Panama property a potentially profitable investment.

  4. Foreign Investment in Real Estate

    Foreign and local citizens are guaranteed equal treatment in investment and property transactions, reinforcing Panama’s tradition of providing an investment-friendly foreign investment arena.

    Panama foreign investments are protected by virtue of Law 54 of 1998, which guarantee investors along with their business, in any and all areas, equals rights as they were nationals of Panama.

    Moreover, there are no restrictions for investing in the Real Estate Sector, or any other whatsoever, they are guarantee freedom to participate in trade, industry, exporting and importing.

    A low cost of living and tax exemptions make Panama a cost-effective location in which to invest. Its tariffs are the lowest in the region, helping to increase foreign investment in both the public and private sectors.

    Government incentive schemes have produced over 40 Decree –Laws, Executives Decrees and Laws offering investors special import, tax and operational advantages. These apply particularly to the tourism, maritime, real estate and mining sectors.

    Finally, Retirement property investment is heavily boosted by the fact that the government’s Retiree Programme entices international retirees due to its many tax exemptions and discounts.

  5. Real Estate Purchase and Sale in Panama

    Purchase and Sale of Real Estate in Panama is very straight forward process. It is customary that before the actual transaction takes place, contractors sign a “Promise to Purchase”. This contract is a preliminary contract between the buyer and the seller which is signed to give the purchaser time to work out financing before committing to the purchase. It also can be used where the seller has certain commitments or conditions which must be met before they are able to purchase.

    Once the conditions of the Promise to Purchase are met, and the financing approved if any, the Purchase Contract will be sign.

    After the signing a Property Deed will need to be written and “Notarized” (legalized by a Public Notary). This Property Deed is required to be registered at the Public Registry of Panama in order to the Purchase to come into effectiveness. Non Registered Property Deeds are considered void and there will not be transfer of property.

    Only and after the registration at the Public Registry is complete, the purchase is considered complete.

    The total frame time for the process can be four to six weeks depending on the complexity of the transaction.

  6. What are the government taxes for the transfer of property titles from sellers to purchasers?

    Prior to the recording of the deed, the seller is required to pay the tax authorities the 3% of the larger amount between the sale price and the recorded property value as an advance of the capital gains tax. The tax has to be pay before the registering of the new property at the Public Registry.

    An additional 2% tax of Transfer of Immovable Property will be levied if the transfer it is the second or following transfer of the property.

  7. Title Insurance

    It is possible to get title insurance in Panama, although this is not a common practice.
    Since the common practice for the purchase of properties involves banks and obtaining a mortgage, the banks of the purchaser will issue an "irrevocable promise to pay" which is conditional on the Property Deed registration, in favour to the purchaser, at the Public Registry of Panama.

    Most of the time the buyer will opens a bank account (or gets a mortgage), and then formally requests that the bank issue the "irrevocable" promise to pay the Seller. At the closure, the seller will be given the bank's letter and this is considered to be an appropriate form of payment.

    Once the title and its property deed have been successfully transferred to the Buyer by its registry in the Public Registry of Panama, the bank then pays the seller. If you are not getting a mortgage, then you will need to pay the bank for this service. The costs vary from bank to bank.

  8. Panama Banks Real State Financing for Foreigners

    Panama´s banking legislation for foreign buying property within the territory can be observe from two points of view: i) if the foreign is a resident with a defined migration status and ii) if the foreign is non-resident in Panama. Both categories have similar requisites, but differ mainly on the amount of advance payment that has to be paid in order to have a mortgage approved by the bank.

    Initial advance payment of 30% to 50% of the value of the property (varies according to the bank policies) is required for non-residents of Panama.
    United States of America citizens are required to fill the Form W-2, Wage and Tax Statement, from the last two years.

    Also Panama is signatory of an Exchange of Information and Cooperation on Tax issues Treaty with the US, as well as party to the International Convention for Repressing the Financing of Terrorism, thus Panama has to comply with several rules of “know your client” rules and normative and the Banks will require total disclosure for foreign applying to any transaction within the territory.

Get in touch


(+507) 343 3909



PH El Palmar Residences,
Sales Office #1, Panamerican Road Km 93,
San Carlos, Panama