Panama Coast
The laws of real estate vary from one nation to the next. It is always important to acquaint yourself with these rules prior to shopping for a new home or you might end up buying something you don’t end up owning.
In Panama, there are actually two different kinds of property ownership. The first is one that U.S., Canadian, and most European buyers will be familiar with.
Called “Titled Property” or “Propiedad Titulada”, this form of ownership works as the name implies. The owner of a property is recorded on a title and this is filed in the Panamanian Public Registry Office. This agency maintains all property records for the nine provinces of Panama.
Purchasing Titled Property should be accomplished in steps. The first of these is the completion of a Promise to Purchase Agreement. This step allows time for the buyer to work through their due diligence on the property. When pursuing this step, make sure to retain professionals and remember that title insurances is always cheap no matter what the cost.
When you have done your homework, you will enter into a Purchase and Sale Agreement. Unlike many other countries, your payment for the property will generally be held in escrow until the Public Deed reflecting your ownership is filed at the Public Registry.
Another common form of real estate ownership in Panama is called “Rights of Possession” or “Derechos Posesorios”. You will run across quite a lot this in Panama’s more rural areas. A Rights of Possession property is actually owned by the local or national government. You don’t actually buy this land, you essentially lease the it under a defined set of parameters for a fixed period of time. When dealing with this form of ownership, you will want to perform an extraordinary level of due diligence to insure that the term of your plans, and every aspect of your intended use are within the guidelines of your land use agreement.
If you are thinking about retiring in Panama or just visiting to develop an asset protection, business, banking, or investment strategy, make sure to begin by building a strong relationship with a local attorney. There are many third party sources able to help you select the best one for your needs. These groups provide unbiased reviews of providers in Panama’s professional community speeding you to a successful pairing.
Panama Real Estate Taxes
Article 764 of the Panamanian Tax Code indicates which properties are exempt from property tax. These properties include:
- Properties registered at a value of 30,000 USD or less including improvements to the land, i.e. construction
- Land used exclusively for farming and registered with the Ministry of Agriculture and Development at less than 150,000 USD.
If you have a property valued at 100,000 USD you should pay the following in property taxes:
2.10% of 100,000 USD (0.00 USD for the 0 -30,000 bracket which is tax exempt) + (349.98 USD for the 30,001 – 50,000 bracket at a rate of 1.75%) + (487.48 USD for the 50,001-75,000 bracket at a rate of 1.95%) + (524.98 USD for the 75,001 – 100,000 bracket at a rate of 2.1%) = a total of 1362.44 USD for annual property taxes
Panama City
Property Tax Exonerations/Incentives for New Construction
The Consejo de Gabinete has approved a property tax exoneration extension of the 20-year property tax exemption for apartments and houses.
The measure applies to projects whose building permits are issued before Dec. 31, 2009. Herrera explained that the measure extends the property tax exemption that expired in August.
Additionally, the land and improvements of restored buildings located within the areas Santa Ana, Salsipuedes, and sections of Terraplén within the historical district of Casco Viejo which is declared a historical patrimony will be exempt from paying the Real Estate Tax for a period of 30 years counted as from the restoration of the property.
- In order to benefit from this incentive, the investment must be made during the ten years following the establishment of the Decree-Law, that is, until August 2007.
Panama real estate law distinguishes between two kinds of property:
- titled property
- public or state owned property
Titled property is that property whose ownership, area, value, boundaries and details are recorded in the Public Registry of Panama. The Property section of the Public Registry contains a record system of all titled property in the Republic.
Public or state owned property includes all lands and territories owned by the Republic of Panama. These lands can be used in several ways:
- By an individual or company once administrative concession has been granted.
- For agricultural purposes once Right of Possession certification has been granted by the Ministry of Agriculture. Law 2 of the year 2006 acknowledges recognized Right of Possession land as possible subject for concession.
