Exploring the Real Estate Market in Panama: A Guide to Buying Property in Panama

GABRIEL ILLESCAS PANAMA REAL ESTATE — A Guide to Buying Property in Panama

In the dynamic real estate market of Panama, the abundance of offerings has led to a significant decrease in property values in Panama City, creating a favorable scenario for buyers. Here, we will explore key details that could make a difference when searching for the ideal property, along with a step-by-step guide to buying property in Panama.

Tax Exemptions: A Current Advantage

Some properties still enjoy real estate tax exemptions, especially those built between 2000 and 2011. This uniqueness can influence investment decisions and add long-term value to the property.

Family Heritage Law: Protecting the Home

The Family Heritage Law, established by Law 66 and regulated by Executive Decree 363, stands as an essential pillar for those looking to not only acquire property in Panama but also ensure the stability and protection of their home. Let's delve into the key aspects of this law:

2.1. Protection of the Family Home:

The Family Heritage Law aims to safeguard the home that a family considers its primary residence. Properties valued at B/.120,000.00 or less, including improvements, may benefit from tax exemptions. This not only promotes the acquisition of affordable housing but also creates a favorable tax environment for families.

2.2. Tax Reduction:

When a property is classified as a "Taxable Family Heritage" or "Main Residence," owners may experience a substantial reduction in the tax burden, encouraging investment and long-term stay in the country. The new calculation is as follows:

RANGE RATE

$0 - $120,000	0%
$120,000 - $700,000	0.50%
>$700,000	0.70%

2.3. Key Aspects of Article 764: The law amends Article 764 of the Fiscal Code, adding specific provisions that exempt certain properties from taxes based on criteria such as value and status as Taxable Family Heritage or Main Residence. This approach aims to make the property accessible to a broader population.

2.4. Long-Term Protection: By leveraging the exemptions and tax reductions provided by the Family Heritage Law, owners not only experience immediate benefits but also establish a solid foundation for the long-term protection of their home and investment.

In summary, the Family Heritage Law not only offers tax benefits but also contributes to the creation of stable and prosperous communities by facilitating access to housing and encouraging responsible investment. When considering the purchase of property in Panama, understanding and leveraging this legislation can make a difference in protecting and growing your family heritage.

3. International Access: Purchase for Foreigners

An attraction of the Panamanian market is its openness to foreign buyers. Any foreigner can acquire properties in Panama, providing exciting opportunities for those looking to invest or move to this vibrant country.

4. EXPATS: Using Retirement Funds

The ease of transferring retirement funds, such as 401(k) or IRA, for property purchases in Panama adds financial flexibility to the equation. Numerous financial institutions facilitate this process, allowing retirees to explore real estate options in the country.

Step-by-Step Guide: Buying Property in Panama

After the acceptance of the offer, the purchasing process generally takes about 90 days (except in some exceptions). Here is a quick guide:

The parties agree on a price, and the promissory purchase-sale contract is drafted (NOTE: If you are my client, don't worry. We prepare the contract at no additional cost).
Both parties sign the promissory purchase-sale contract and agree on a date to sign the final deed of purchase-sale (usually 90 days).
The buyer transfers the initial payment (usually 10%) and prepares an "Irrevocable Payment Promise Letter" together with their bank, either from their funds or through financing.
In this step, there are 2 variables related to the seller. If the seller has a mortgage, they will need the bank to issue a Mortgage Cancellation Minute, which will be perfected when the property is registered in favor of the new buyer. Banks are paid internally. If there is no mortgage, the process continues to the next step.
The seller proceeds to pay their corresponding taxes. For this, they will need certain information (NOTE: If you are my client, don't worry. I take care of this part!).
The transaction is completed with the registration of the new title in favor of the buyer in the Public Registry, and the seller can cash the Irrevocable Payment Promise Letter.

By exploring these facets of the Panamanian real estate market, buyers can make informed decisions and take advantage of the unique opportunities offered by this vibrant destination.