Panama Property Foreign Ownership
Buying a property for a foreigner in Panama is relatively easy with the rights of all owners protected by law. Foreign buyers may buy and sell titled property in Panama, and may also repatriate the proceeds to their home country. However, it should be noted that Article 121 of the Panama Tax Code prohibits foreign buyers, or Panama corporations with foreign ownership, from purchasing property located less than 10 kilometres from the national frontiers, or any island under Panamanian jurisdiction.
The property tax laws in Panama are investor friendly and allow buyers to claim up to 20 years tax exemption when building a house.
Panama Property Types
There are three types of property in Panama. "Titled Property", where the buyer owns the property; "Right of Possession" property also sometimes referred to as a "Limited Ownership Property", where the buyer only owns the right to occupy the property; and untitled property which is property that is in use by the owners without any title and cannot be legally transferred to a foreign buyer.
The Public Registry in Panama has one of the most reliable and modern property registration systems within Central America and records the titled properties in each of the 9 provinces of Panama. The information stored in the Public Registry may be easily accessed by either the buyer or the buyers lawyer, when performing a due diligence search on the property. See also Steps to Buying a Titled Property
Right of Possession Property
Panama has many investment properties located in tourist areas that are nationally owned or belong to the local provincial government, and therefore not recorded in the Public Registry. Since it is not possible to offer the owner of one of these properties title, the owner is instead offered ‘possession rights' over the property, giving the owner the right to occupy and enjoy the property for a defined period, similar to a UK leasehold property.
However, the is no uniform method of approving possession rights and therefore it is essential that the buyer ensure that the "possession right" or "limited ownership" is properly approved by the local or national government authorities and verify that the approval contains a complete description of the property boundaries and any encumbrances. It is also important to check that the intended use of the property is allowed and that the period of time allowed is sufficient to meet the buyers requirements.
It is important for buyers to appreciate that a Titled Property can be mortgaged, whereas a Rights of Possession property cannot and that the process for getting possession rights can take up to 6 months.
See also Steps to Buying a Right of Possession Property.
Panama Closing Costs
Property closing costs vary depending on the transaction. If the property being purchased is privately owned and held under the sellers own name, and the buyer has formed a Panamanian corporation to purchase the property (recommended), then the closing costs are:-