Panama — Property: Buying Process

Why this matters

Foreigners may be interested in purchasing property in Panama for retirement or investment purposes, but the buying process can be challenging without proper guidance.

Key facts

• The property transfer tax (ITBI) is 2% and is filed by the party transferring the real estate, using Form 106 online on e-Tax 2.0 and presenting it at a regional DGI office for verification.
• Documents at transfer: the public deed showing how the owner acquired the property, the articles of incorporation if the owner is a company, a copy of the owner's ID, and the purchase and sale contract.
• The ITBI is paid at an authorised collection entity with the Boleta Multiple de Pagos, code 120, in the same calendar month as the declaration.
• The seller must also file Form 107 (capital gains) before the sale is registered in the Registro Publico, in the same calendar month, paid with code 113.
• If the sale does not go through, Forms 106 and 107 can be cancelled under a separate DGI procedure.

Steps

1. Step 1: Find a Property — Research and find a property that meets your needs and budget. Work with a reputable real estate agent or attorney to ensure the property is free of any disputes or liens.
2. Step 2: Open a Panamanian Bank Account — To purchase property in Panama, you will need to open a Panamanian bank account. This is required to hold the minimum down payment and to facilitate the transfer of funds.
3. Step 3: Engage a Licensed Attorney — A licensed attorney is necessary to guide you through the buying process. They will review the property title, draft contracts, and represent you in any negotiations.
4. Step 4: Sign the Contract — Once the property has been identified and the necessary documents have been prepared, the buyer and seller will sign the contract. This is a binding agreement that outlines the terms of the sale.
5. Step 5: Obtain the Title — After the contract has been signed, the attorney will work to obtain the title to the property. This involves reviewing the property's history and ensuring that there are no outstanding liens or disputes.
6. Step 6: Close the Sale — The final step in the buying process is to close the sale. This involves transferring the funds, signing the title, and transferring ownership of the property.