Apartment Sales > Panama > Buyer's Guide of PANAMA
Buyer's Guide of PANAMA
GENERAL INFORMATION
1. What currency is used in the country?
American dollars (US$) are the banknotes in circulation.
2. If I buy a home will I pay in Euros or in local currency?
In local currency: American Dollars
INFORMATION ON THE DEED OF SALE
1. Where is the deed of sale signed?
In Panama, the contracting parties subscribe to the deed of sale before Public Notary, who is assigned to elevate it to public deed level. Thereafter, the deed is inscribed in the Section of the Panama Property Register.
2. In Spain, approximately 3% of expenses plus 7% VAT is paid. What are the expenses in Panama of Deeds, Notary, Registry, Transfer Tax and Stamp Duty, other legal expenses, etc.?
There is no VAT in Panama. Notarial expenses are unusually low, and don’t usually go over 1.2% and 1.5% of the operation, between expenses and taxes.
3. According to the law in Panama, can the property be sold to third parties before signing the deeds?
Yes, local law states that the sale is completed once the inscription of the public deed has been made, which means that it can be sold before signing the definitive deed of sale.
4. Can Marina d’Or sign the deed of sale in the name of the buying client?
Yes. Marina d’Or can sign the deed of sale in the name of the buying client, through notary power. To this effect, it is very common for real estate promoters to manage the whole deed-signing process.
5. Can the mortgage be taken out in Spain even if the deeds are signed in Panama?
No. It’s not possible
6. Can the client subrogate the mortgage taken out in Panama?
Yes.
7. If you buy an apartment then sell it, can the money be taken out of the country?
Yes, the money can be taken out of the country, without any problems. No restrictions for the overseas transfer of capital exist in Panama.
INFORMATION REGARDING THE CONTRACT
1. Should there be any legal discrepancies, will they be resolved by the Spanish or local courts?
Should there be any legal discrepancies, they will be resolved by the competent courts of Panama.
2. If I annul the contract before signing the deeds, is the money returned?
No. In practice, it is very common for real estate promoters to establish in their contracts of promise of deed of sale that if their clients do not comply with their payment obligations, or if for any reason they decide to cancel or declare the contract invalid before subscribing the signing of the deed of sale, the company (selling party) has the faculty to demand the compliance of the contract, or alternatively subscribe a new contract of promise of deed of sale to a third party or effectively sell the flat or property to a third party.
Likewise, all amounts paid by the clients for the purchase of the flat or property until the moment of no compliance of payment to the company will not be returned.
3. Do I need a NIE (Foreigner’s Identification Document) or any similar document for the purchase of real estate property in Panama?
No special document is required for those foreigners buying flats or apartments in Panama. All that is needed is a photocopy of their passport or national identity number so as to include their particulars in the promise of deed of sale contract.
4. If a client wants to change the name of the titular of the contract to a third party, can he do this?
Yes, but always before the definitive deeds have been signed. In the first place, the client can transfer the rights and obligations arising from the contract of promise of deed of sale subscribed with the real estate promoter for the purchase of a flat or departmental unit; however, with this kind of contract, it is common practice for the client (promised buyer) to obtain written consent from the real estate promoter (promised seller) in order to carry out the transfer.
Once the definitive deed of sale has been inscribed in the Public Register, the titular cannot be changed without another deed of sale contract being written up, and in most cases, this entails the payment of taxes which are detailed below.
INFORMATION REGARDING TAX AND DOCUMENTATION
1. What taxes must I pay in Panama if I sell my home? And in Spain?
The taxes that a foreign investor in Panama must pay when selling a flat or a property are:
In Spain:
3. How much is Real Estate Tax (if it exists)?
In Panama, Real Estate Tax exists, and 2.10% per annum of the registry value of the property must be paid.
4. What is the current interest rate in Panama?
The rate of interest of residential mortgages of the local market, established by the Panama Banking Regulator is at 6.75%, referring to the first term of 2008, according to the CFL 3-85 Nº 1-2008 announcement.
5. What are the mortgage conditions in Panama?
6. How much have homes increased in value in Panama since 2006? ¿What is the forecast for 2008? And the CPI (Consumer Price Index) of the last three years? And future forecasts?
Homes in Panama appreciated 15% in 2006, 15% in 2007, and are expected to appreciate another 10% in 2008.
1. What currency is used in the country?
American dollars (US$) are the banknotes in circulation.
2. If I buy a home will I pay in Euros or in local currency?
In local currency: American Dollars
INFORMATION ON THE DEED OF SALE
1. Where is the deed of sale signed?
In Panama, the contracting parties subscribe to the deed of sale before Public Notary, who is assigned to elevate it to public deed level. Thereafter, the deed is inscribed in the Section of the Panama Property Register.
2. In Spain, approximately 3% of expenses plus 7% VAT is paid. What are the expenses in Panama of Deeds, Notary, Registry, Transfer Tax and Stamp Duty, other legal expenses, etc.?
There is no VAT in Panama. Notarial expenses are unusually low, and don’t usually go over 1.2% and 1.5% of the operation, between expenses and taxes.
3. According to the law in Panama, can the property be sold to third parties before signing the deeds?
Yes, local law states that the sale is completed once the inscription of the public deed has been made, which means that it can be sold before signing the definitive deed of sale.
4. Can Marina d’Or sign the deed of sale in the name of the buying client?
Yes. Marina d’Or can sign the deed of sale in the name of the buying client, through notary power. To this effect, it is very common for real estate promoters to manage the whole deed-signing process.
5. Can the mortgage be taken out in Spain even if the deeds are signed in Panama?
No. It’s not possible
6. Can the client subrogate the mortgage taken out in Panama?
Yes.
7. If you buy an apartment then sell it, can the money be taken out of the country?
Yes, the money can be taken out of the country, without any problems. No restrictions for the overseas transfer of capital exist in Panama.
INFORMATION REGARDING THE CONTRACT
1. Should there be any legal discrepancies, will they be resolved by the Spanish or local courts?
Should there be any legal discrepancies, they will be resolved by the competent courts of Panama.
2. If I annul the contract before signing the deeds, is the money returned?
No. In practice, it is very common for real estate promoters to establish in their contracts of promise of deed of sale that if their clients do not comply with their payment obligations, or if for any reason they decide to cancel or declare the contract invalid before subscribing the signing of the deed of sale, the company (selling party) has the faculty to demand the compliance of the contract, or alternatively subscribe a new contract of promise of deed of sale to a third party or effectively sell the flat or property to a third party.
Likewise, all amounts paid by the clients for the purchase of the flat or property until the moment of no compliance of payment to the company will not be returned.
3. Do I need a NIE (Foreigner’s Identification Document) or any similar document for the purchase of real estate property in Panama?
No special document is required for those foreigners buying flats or apartments in Panama. All that is needed is a photocopy of their passport or national identity number so as to include their particulars in the promise of deed of sale contract.
4. If a client wants to change the name of the titular of the contract to a third party, can he do this?
Yes, but always before the definitive deeds have been signed. In the first place, the client can transfer the rights and obligations arising from the contract of promise of deed of sale subscribed with the real estate promoter for the purchase of a flat or departmental unit; however, with this kind of contract, it is common practice for the client (promised buyer) to obtain written consent from the real estate promoter (promised seller) in order to carry out the transfer.
Once the definitive deed of sale has been inscribed in the Public Register, the titular cannot be changed without another deed of sale contract being written up, and in most cases, this entails the payment of taxes which are detailed below.
INFORMATION REGARDING TAX AND DOCUMENTATION
1. What taxes must I pay in Panama if I sell my home? And in Spain?
The taxes that a foreign investor in Panama must pay when selling a flat or a property are:
- If in his name, he must pay 2% of the sum of the sale of the operation in concept of Real Estate Property Transfer Tax and 10% from the profit gained from the operation in concept of Income Tax.
- If in the name of a company, its shares can be sold, and only 10% of the profit gained in concept of Income Tax would have to be paid.
In Spain:
- An individual must tribute approximately 20% on the capital gained in the sale of the property in concept of Increase of Patrimony.
- If it is a company, then it will tribute Company Tax on the capital gained from the sale of the property.
3. How much is Real Estate Tax (if it exists)?
In Panama, Real Estate Tax exists, and 2.10% per annum of the registry value of the property must be paid.
4. What is the current interest rate in Panama?
The rate of interest of residential mortgages of the local market, established by the Panama Banking Regulator is at 6.75%, referring to the first term of 2008, according to the CFL 3-85 Nº 1-2008 announcement.
5. What are the mortgage conditions in Panama?
- Credit for nationals (from Panama) and homes of up to around $60,000 USD can be obtained between 6 and 7.5%, in instalments between 20 and 30 years, and between 80 and 95% of the home can be financed.
- Credit for foreigners: Between 50 and 70% can be financed, at an interest rate of between 7 and 9%. Necessary documents: Photocopies of passport and of the deed of sale contract and work contract, or if self-employed, income tax declaration of the last three years.
6. How much have homes increased in value in Panama since 2006? ¿What is the forecast for 2008? And the CPI (Consumer Price Index) of the last three years? And future forecasts?
Homes in Panama appreciated 15% in 2006, 15% in 2007, and are expected to appreciate another 10% in 2008.
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