Why buy in Panama?
Panama is one of the most beautiful countries in all of Latin America. The area ranges from highly modern cities to gorgeous mountains and unblemished coastland on two coasts. Panama is also one of the most affordable and stable countries in all of Latin America.
Panama’s currency is the U.S. Dollar. Panama is also a global banking and technology center. As such, those relocating or retiring to Panama can expect many of the same modern conveniences that they have at home.
Lastly, roughly 15,000 Americans have already relocated or retired in Panama. With the U.S. Dollar as main currency, modern lifestyle, low crime rate, low cost of living, great weather and proximity to the U.S. (2 hours by air), Panama is an excellent choice for affordable retirement and relocation in Latin America.
Panama Property Ownership
Foreigners are able to buy and own property in Panama with the same rights and protections as Panamanians citizens. In 1998, the Investment Stability Law was created to encourage foreign investment. This law protects foreign investors for ten years and provides a guard from changes in tax, customs duties, and both municipal and labor laws.
Tax incentives exist for those buying property in the name of a company. If real estate is purchased in the name of a company, a 20 year exemption from real property tax is granted by the National Registry of Tourism. The exemption applies to the company as long as purchased land is used for tourist activities. In addition, the government also grants a one-time exoneration from import duties to help in construction, remodeling, and furnishing of building. Property tax exemptions apply to all new construction on a sliding scale according to value.
As with any potential law or tax savings, we highly encourage you to work with one of our qualified real estate professionals before making any purchase in Panama or any other country in Latin America. For more information, please complete our contact form or visit one the Latin American Real Estate Experts listed on our site.
General Panama Real Estate Information
The following is general information on purchasing real estate in Panama. It is not to be construed as legal advice. The different categories of land make it imperative to engage professionals for more detailed information. Real estate laws on the mainland can be quite different than those on islands, coastal areas, and areas near national borders.
Generally, there are two very different ways to buy real estate: 1) the purchase of titled property, and 2) the purchase of rights of possession (derecho posesorio). Titled land, and the process of buying this, is similar in concept to that in the U.S., and land and deeds are duly recorded with the Public Registry (Registro Público). “Rights of possession” is an entirely different process, a kind of squatter's or concession rights. For rights of possession on the mainland, it might be possible to convert this later to a titled property; on islands and coastal and border areas, it is much more difficult if not impossible. Many areas in and around Bocas del Toro, including beachfront and island properties, are government property, and cannot be owned, although there are very limited and complicated exceptions. One should not buy "non-adjudicable" lands (áreas inadjudicables) unless the purchase is from the Government of Panama. Ultimately, there is only one way to acquire property in Panama to the fullest extent of the law: titled land. Rights of possession is not titled land.
Titled Properties
Panama has a reliable Public Registry system, and this office maintains a record of all titled properties throughout most of Panama. Information regarding titled properties is readily available through the Public Registry, and is a fairly routine process to undertake through due diligence on a lot or property (finca). Your attorney can issue you in writing an abstract title of the land, along with any and all liens, mortgages, covenants, encumbrances, maps, verification of tax payments and utility bills, special characteristics, ownership history, fence lines, encroachments, shared driveways, and registered surface area, and can verify that the person who is selling the property is the actual owner.
Rights of Possession
Not all properties in Panama are of private domain and thus are not subject to Public Registry registration. Such properties are public property, and can rarely be owned or titled outright. In such cases, it might be possible to obtain "rights of possession," a kind of squatter's or concession rights, as an alternative to title, permitting one to acquire a right to possess based on the occupation and use of a certain area of land over time. (Think of trying to "buy" parts or all of the Grand Canyon, New York's Central Park, or the Washington Mall. You obviously cannot. However, a U.S. rancher can buy grazing rights in a U.S. national park, a company can buy limited use of national lands for mining or drilling, and a company can gain a concession to build a restaurant within a national park. But none will ever hold title.) Much of the property in and around Bocas del Toro, beachfront properties, islands, and areas in rural, agricultural and special tourism zones, are government-owned. In some cases, titles are held by families from many generations back and obtaining rights of possession might be possible, but the buyer would still have to pay for the land when and if, he or she obtained the title. This is a risky method of acquiring real estate.
Just as in the United States, it is important that all properties undergo a title search before completing a purchase. Properties can be subject to third-party and and/or conflicting claims of ownership, and the vagaries of Panamanian law and local politics. It might be possible that the original owner return to claim it, or the government could exercise its right to re-occupy it without compensation or warning. For titled property, no one can do this without following a condemnation process similar to that in the U.S., with the owner compensated for land and improvements. Rights of possession are handled and recorded by the Ministry of Agriculture's Agrarian Reform Office, not the Public Registry.
