Can foreigners buy property in Panama?

Buying property in a foreign country can be an exciting and rewarding experience, especially in Panama. Our country, with its thriving economy and beautiful landscapes, has become an attractive destination for investors and those looking to acquire property abroad, particularly in areas such as Boquete in Chiriquí, Panama City, and the beach areas in Veraguas.

However, before embarking on this adventure, it is crucial to understand the legal requirements for foreigners wishing to purchase properties in Panama. Additionally, there are some important precautions that prospective buyers should consider before signing a contract and making the payment.

Legal requirements for foreigners wishing to purchase properties in Panama

In general terms, it is completely legal and possible for foreigners to purchase property in their own name, regardless of whether they live in the country, were born here, or are foreign nationals. There are no special requirements. However, there may be conditions that are important to be aware of.

• Investment Permit: According to Panamanian law, foreigners must obtain an Investment Permit issued by the Ministry of Commerce and Industries (MICI) to purchase properties in restricted areas, such as borderlands or islands. This permit ensures that foreign investment will not affect national security or the country’s economy.

Furthermore, the only limitation for a foreigner buying real estate is that they cannot own properties within 10 kilometers of Panama’s borders or coastlines.

• Public Registry: After the purchase, it is mandatory to register the property with the General Public Registry to secure property rights. This registration ensures legal validity and protects the interests of the foreign buyer.
• Taxes: Foreigners must comply with the tax obligations established by Panamanian laws. This includes the payment of real estate transfer taxes (ITBMS) and property transfer tax (3% of the sale price or the highest cadastral value).

Precisely for these reasons, our first recommendation for anyone wishing to buy properties in Panama or establish themselves here permanently or temporarily is to seek a lawyer and/or a real estate broker.

In that sense, at Candanedo Correa, we provide guidance to our foreign clients throughout the real estate investment process to prevent scams or inconveniences. Therefore, we also want to share some suggestions.

Precautions before signing a contract and paying for a property

• Property Verification: Before committing to the purchase, it is essential to conduct thorough due diligence to verify the property. This involves researching the property in the Public Registry, confirming that the seller is the legitimate owner, and checking for any liens, mortgages, or other legal issues associated with the property.
• Legal Advice: It is highly recommended to hire a trusted and experienced lawyer in real estate transactions in Panama. Our specialized attorneys can review the purchase agreement, ensure that all legal aspects are in order, and provide professional advice throughout the process.
• Property Inspection: It is also crucial to conduct a detailed inspection of the property. If it is a house or building, for example, this includes checking the condition of the construction, the quality of materials used, and ensuring that everything is in accordance with what is agreed upon in the contract.
• Contract Conditions: It is essential to carefully review all the terms and conditions of the purchase agreement, including the sale price, payment deadlines, clauses, and others.

If you require legal assistance because you are considering purchasing a property in Panama, please contact us. This type of transaction should not be left in the hands of just anyone. Avoid future problems by relying on the best legal advice.