Panama is a country in growth, according to figures from the World Bank it will be the fastest growing country in Latin America and the Caribbean with 6.3% in 2015. Sustained growth compared to 2014 was 6.2%. With an inflation rate of 4% and a population of 3.8 million Panama offers one of the best places to invest in the region.

The real estate Panama sector particularly has been an important factor in the remarkable story of growth in the country. 15 years ago, Panama has never imagined the amount of skyscrapers and buildings that currently have. Today, this impressive growth in real estate, has been the product of mass housing search of people who have arrived in the country from the United States, Europe and Latin America. During this period Panama won the fame of the “Dubai of Latin America. ”

Real estate Panama sector does not decrease, it does the opposite, increase over the years. This is due, among other factors, because Panama is a country with many job opportunities and very low unemployment rate, in addition to a strong economy and a currency like the dollar, which attracts many US citizens.

But … what we need to know about investing in real estate Panama?

1. Tax types, percentages and who should pay for them

The first thing to know is that any sale of properties involves the payment of certain taxes. In the case of Panama and not very different from other countries, consists of three taxes and that, unless otherwise agreed, the seller is responsible for paying these taxes.

– Property tax: depending on the property.

– Tax disposal of Property: 3% of the sale profit

– Transfer tax property: 2% of the sales price

2. Fees and exemptions. How much you should pay?

To have a base on the subject you should know that real estate Panama agents typically charge between 3% to 5% of the sale price of the property.

As a recommendation, look for possible tax-exempt properties. Many properties in Panama have 20 years of tax exemption. There are specific requirements that must be met for each case. Check with your lawyer to find out what taxes are applied to your property.

3. Buy through a corporation vs. natural person. Follow this advice.

Foreigners and locals alike can buy real estate in Panama with a company name of a Panamanian corporation type. If they do, they avoid paying 2% of the sales price for the tax on the transfer of the property mentioned in the first part. Instead, just the actions of the company that owns the property is sold. So simple you save 2% of the property price.

4. ¿First time home buyer? Find out about financing options available in Panama.

In Panama there is a law called “preferential interest law” which offers lower interest rate under the following conditions:

  1. The buyer must be a first time buyer.
  2. The property to be purchased must be newly built.
  3. The unit must be in order to live in it.
  4. The amount to be funded must be in the range of US $ 25,000 to US $ 62.500 after the initial payment.
  5. Funding may not exceed 95% of the appraisal.
  6. The property must be titled.
  7. The term of the loan should not exceed 15 years.

5. Financing for foreigners. What do you need?

For foreigners, all major banks in Panama offer to fund 70% of the value of the property for 25 years, usually at an annual rate of 6.5%

According to the Superintendence, there are 39 banks in Panama that hold stocks in its portfolio of mortgage loans, as in the case of Banistmo, Scotiabank, BAC International, Banco General, Credicorp Bank, Banesco, among others.

Bank requirements to provide financing? 

  • Copy of passport
  • Second identification document (ID card of their country).
  • Credit report from your country (example: SICRI, Datacrédito, Dicom-Chile-Peru Infocorp, etc.).
  • Verification of assets: savings accounts, check accounts, mutual funds, certificates of deposits, registration of ownership, vehicle registration, bank statements, etc. If you have mortgage, present statement, payment of taxes and fire insurance.
  • If you have an account outside their country of origin, present states of updated accounts.
  • Submit two (2) bank reference letters addressed to the creditor bank.
  • Copy of utility bills that have the physical address of the actual residence of the last month. If less than two years submit a copy of receipt of the former residence.

Looking for housing in Panama, and do not know where to start? Start here.