Contents of this guide
What a foreigner can buy in Panama
Panamanian law does not distinguish between nationals and foreigners for titled real estate: any person, whether or not they reside in the country, can buy, sell, inherit and mortgage a property registered at the Public Registry. The only relevant constitutional restriction affects land within ten kilometres of the borders with Costa Rica and Colombia, and some islands and coastal areas are governed by administrative concessions instead of full ownership.
Legal Solutions Panamá, a law firm specialising in real estate law, in its analysis of whether it is legal for foreigners to buy property in Panama
The distinction that does matter is between titled property, with a title folio at the Public Registry, and possessory rights, common in rural and beach areas, which are not ownership and cannot be mortgaged or transferred with the same security. A foreign buyer should stick to titled property unless they have specialist advice.
In your own name
The simplest option. The foreigner appears as owner with their passport. Valid for a primary residence and for access to the family estate tax benefit.
Through a company
Common for investment and for estates with several properties. It eases succession and the sale of shares, but loses the primary residence exemption.
With a private interest foundation
A Panamanian vehicle for estate and succession planning, regulated by Law 25 of 1995. Useful for families with heirs in several countries.
With local financing
Panamanian banks finance non-resident foreigners with lower percentages and more documentation. A resident gets better terms.
The buying process step by step
- Reservation and promise of sale. A promise is signed with a deposit, usually 10%, which sets the price, deadline and conditions. It is advisable to register it at the Public Registry so it is enforceable against third parties.
- Title search. A lawyer checks the property’s title folio at the Public Registry: owner, encumbrances, mortgages, liens and limitations. It is also checked that the seller is up to date with property tax and maintenance fees.
- DGI tax clearance certificate. The Directorate General of Revenue issues the certificate that the property has no tax debts, a requirement for the deed.
- Payment of transfer taxes. The seller settles the 2% transfer tax and the 3% advance on income tax with the DGI. Without that payment, the notary does not notarise.
- Public deed before a notary. The sale agreement is signed and the notary raises it to a deed. The foreigner can sign by power of attorney if not in Panama.
- Registration at the Public Registry. Ownership transfers when the deed is registered, not when it is signed. The usual timeframe is days to a few weeks. As Legal Solutions Panamá warns, “if the property is not registered at the Public Registry, the buyer will not be recognised as the legal owner”.
- Primary residence declaration. If the property will be the habitual residence, the sworn declaration of family estate or primary residence is filed with the DGI to access the exemption.
Taxes and costs of the transaction
The Panamanian system charges the transfer taxes to the seller and the formalisation costs to the buyer, though the parties can agree a different split in the promise.
| Item | Calculation base | Who pays | Rule |
|---|---|---|---|
| Real estate transfer tax | 2% on the higher of the sale price and the updated cadastral value | Seller | Tax Code, article 701 |
| Advance on income tax for capital gains | 3% on the higher of the price and the cadastral value; a refund can be requested if the actual gain is taxed less | Seller | Tax Code, article 701 |
| Notary fees | According to the notarial tariff and number of pages | Buyer | Notarial tariff |
| Public Registry registration fees | Proportional to the value of the transaction | Buyer | Public Registry tariffs |
| Lawyer’s fees | Agreed; usually a percentage of the price or a flat fee | Buyer | Free |
| Real estate commission | Agreed; the custom in Panama is for the seller to bear it | Seller | Free |
New homes sold by developers were for years taxed with partial exemptions from the 2% on first sale; that benefit has been phased out, so the off-plan buyer should confirm with the developer which taxes apply to their specific contract.
Annual property tax and exemptions
Law 66 of 2017 lowered property tax rates and created two figures that benefit the owner who lives in their home: the family estate tax benefit, for the home where the owner lives with their family, and the primary residence, for those who live alone. Both require a sworn declaration to the DGI and apply to a single property per taxpayer.
| Cadastral value | Primary residence or family estate | Other properties (second home, investment, commercial) |
|---|---|---|
| Up to 30,000 USD | Exempt | Exempt |
| 30,001 to 120,000 USD | Exempt | 0.6% on the excess over 30,000 |
| 120,001 to 250,000 USD | 0.5% on the excess over 120,000 | 0.6% |
| 250,001 to 500,000 USD | 0.5% | 0.8% on the excess over 250,000 |
| 500,001 to 700,000 USD | 0.5% | 1% on the excess over 500,000 |
| More than 700,000 USD | 0.7% on the excess over 700,000 | 1% |
In addition, new homes worth between 120,000 and 300,000 dollars that are declared as family estate or primary residence are exempt for three years from the occupancy permit or registration, whichever comes first. The tax is paid in three annual instalments, with a discount for early payment.
Most sought-after areas and what to look at in each
| Area | Buyer profile | What to check |
|---|---|---|
| Panama City: Costa del Este, Punta Pacífica, San Francisco, Casco Antiguo | Executives, rental investors, urban second home | Building maintenance fees, status of the property at the Registry, short-term rental restrictions in the condominium rules |
| Pacific beaches: Coronado, Gorgona, Buenaventura, Río Hato | North American retirees, second home | Whether it is titled property or a concession, access to water and services, distance to the new Río Hato airport |
| Boquete and Volcán (Chiriquí) | Retirees, mountain climate | Possessory rights are common on rural land; verify title and boundaries |
| Bocas del Toro | Tourism, hospitality | Many islands are under concession or are indigenous comarca land; advice is essential |
| Pedasí and Azuero | Tourism and retirement | Recent titling on many plots; check beach access easements |
The tourism boom in the interior, with direct flights to Río Hato and an IDB loan for infrastructure, is moving demand outside the capital, as Radar Panamá analyses in its report on tourism figures. Anyone buying to rent short term should review the building rules and municipal regulations before counting on that income.
Common mistakes of the foreign buyer
- Buying possessory rights believing it is ownership. It is the most expensive mistake. Only titled property with a title folio gives full security.
- Paying without escrow. Handing over the money before registration leaves the buyer without protection if an encumbrance appears.
- Not reviewing the condominium rules. Many buildings prohibit daily rentals or restrict pets and renovations.
- Forgetting the primary residence declaration. Without it the full property tax rate is paid even if you live in the home.
- Buying through a company for the habitual home. The exemption is lost and financing becomes harder. A company makes sense for investment, as explained in Radar Panamá’s guide to Panamanian companies.
- Confusing purchase with residency. Buying does not grant automatic residency. Real estate investment does open immigration routes with minimum amounts, detailed in the guide to residency by investment.
Frequently asked questions about buying property in Panama
Can a foreigner buy property in Panama?
Yes, with the same rights as a Panamanian and without needing to reside in the country. The exceptions are land within ten kilometres of the borders and areas under concession, such as parts of the islands.
What taxes are paid when buying a house in Panama?
The seller pays the 2% transfer tax and the 3% advance on income tax. The buyer bears the notary, registration fees and lawyer’s fees.
How much is the annual property tax?
For the primary residence: exempt up to 120,000 dollars of cadastral value, 0.5% between 120,000 and 700,000 and 0.7% above. For other properties: exempt up to 30,000, 0.6% up to 250,000, 0.8% up to 500,000 and 1% above, under Law 66 of 2017.
What is the family estate tax benefit?
The figure under Law 66 of 2017 that exempts from property tax up to 120,000 dollars the home where the owner lives with their family. It is requested with a sworn declaration to the DGI and applies to a single property.
What is the difference between titled property and possessory rights?
Titled property is registered at the Public Registry with a title folio and can be sold, inherited and mortgaged with full security. Possessory rights are a recognised occupation but are not ownership and do not offer the same guarantees.
Does buying a property grant residency in Panama?
Not automatically, and the reverse is not needed either: according to Legal Solutions Panamá, “no visa or residency is needed to buy property in Panama”. A real estate investment of 200,000 dollars allows an application for the Friendly Nations visa and one of 300,000 in first sale for Qualified Investor, with additional requirements.
Can a foreigner get a mortgage in Panama?
Yes. Banks finance non-residents with lower percentages, shorter terms and more income documentation. Residents with a local track record get terms similar to those of Panamanians.
How long does a sale take in Panama?
Between four and eight weeks from the promise to registration, if the title is clean and the seller has the clearance certificates up to date. Off-plan purchases depend on the construction schedule.
Need legal support to buy?
Legal Solutions Panamá, a law firm based in Panama City led by Kathia Rivera, with more than ten years of experience and clients from more than 55 nationalities, advises foreign buyers on title searches, deeds, registration and residency procedures.
See whether it is legal for foreigners to buy property in Panama
Sources
- Law 66 of 2017 on property tax, vLex Panamá.
- Tax Code of Panama, articles 701 and following.
- Directorate General of Revenue, property tax and clearance certificate.
- Public Registry of Panama, property lookup and tariffs.
- El impuesto de bienes inmuebles en Panamá, LexLatin.
- Patrimonio familiar tributario o vivienda principal, Arias, Abrego, López & Noriega.
- End of the 2% transfer tax exemption, Pacheco & Asociados.
- Ministry of Housing and Land Management.
- ¿Es legal que los extranjeros compren propiedades en Panamá?, Legal Solutions Panamá.
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