As the recipient of the most significant foreign investment in the region, Panama has cultivated a highly attractive real estate market. Its modern cityscape and first-world tourism projects offer investors diverse opportunities with the same benefits as local citizens.
Many foreigners have chosen to invest in permanent residences, while others, drawn by the country’s stability and advantageous conditions, opt for housing investment through what is known as ‘residential tourism.’ This sector amounted to approximately 10 billion dollars in investment last year alone.
Projects like Buenaventura exemplify amenity-based developments with promising returns in the medium term.
Moreover, with the introduction of the Permanent Residence Visa for Economic Reasons for Qualified Investors, which can be obtained through property purchases valued at 300 thousand dollars or more, the benefits have become even more enticing.
How do you find a suitable property in Panama? We divide the process into four simple steps.
STEP 1: EXPLORING OPTIONS
Several methods are available, including using a broker, browsing developer websites, or conducting searches on Google. However, it’s essential to consider the following:
- Developer’s track record, including their years of experience in construction.
- Experience specifically in the type of project you are interested in, whether urban or beachfront.
- Reviews and feedback about both the developer and the specific project.
STEP 2: THE APPROACH
To begin the process, contact the developer if the project aligns with your preferences. A virtual appointment is crucial at this stage, allowing you to pose pertinent questions about the project.
In Latin America, there’s a saying, “Paper holds everything.” Nowadays, technology enables virtual tours of the surroundings, ensuring the accuracy of the location and details on the website, which is pivotal in decision-making.
A virtual appointment serves as a litmus test for the developer’s professionalism. It allows you to visually explore features that have piqued your interest, aiding in envisioning life in that locale.
ASK EVERYTHING YOU NEED TO KNOW TO AVOID FUTURE SURPRISES AND ABOVE ALL MISUNDERSTANDINGS.
STEP 3: THE PROFORMA AND THE PURCHASE
The proforma is the document that outlines the price and includes all the details of the property you are purchasing. It’s crucial to review it carefully. Once accepted, the client receives a promise of sale.
An important consideration is financing. If the buyer requires banking assistance, the developer should facilitate contact with local banks. Financing can only be arranged through local banks.
With all the paperwork prepared, reviewing the promise of the sale is vital. Two key points should be noted here. The contract’s official language is Spanish, so your signature will be on a document in that language. Translations hold no legal validity.
Additionally, when signing, the contract must be legalized at a Panamanian consulate to give it legal validity.
STEP 4: PROPERTY HANDOVER
The terms “delivery” and “transfer of ownership” denote distinct stages in the real estate process. “Delivery” typically involves the physical handover of keys or possession, while “transfer of ownership” pertains to the legal registration of the property in the Public Registry.
During this process, the property can be registered under various entities, including an individual’s name, a company, or a foundation, depending on the investor’s preferences or visa requirements.
Upon delivery, the property typically comes with a warranty, commonly lasting one year. It is legally protected for ten years against latent defects, damages attributed to the developer that may emerge over time. Structural issues, cracks, and leaks are examples of such defects.
An essential item: Property taxes
Property taxes are administered by the General Directorate of Revenue (DGI) and are calculated based on a progressive rate outlined in the Tax Code. The DGI identifies properties subject to taxation and determines the applicable retention value.
0.00% on the taxable base from $0 to $30,000.
0.60% on the taxable base from $30,000 up to $250,000.
0.80% on the taxable base from $250,000 up to $500,000.
1.00% on the taxable income exceeding $500,000.
BONUS TRACK: IMPORTANT THINGS TO CONSIDER
In Panama, investing in projects during the planning phase is common before construction begins. This presents a promising investment opportunity.
Critical questions for the developer:
- What distinguishes this project from others in the area, and what unique advantages does it offer?
- Could you provide specific details regarding finishes, amenities, and parking arrangements?
- What amenities are available, and which common areas are accessible to property owners?
- Are there any tax benefits applicable to the property’s value?
Companies like Buenaventura Rental & Property Management also provide professional property management services.
We trust that this roadmap provides clearer guidance on purchasing property in Panama, enabling you to enjoy the country’s offerings fully.
