US citizens can purchase real estate in Panama. This procedure requires compliance with a number of rules and conditions, as well as the preparation of documents.
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Requirements
US citizens can freely purchase real estate in Panama under the same conditions as local residents—there are no restrictions for foreigners. The main document is a passport, which allows for the registration of private property (“propiedad privada”) without the need to establish a local company. An exception is coastal areas within 20 km of the border: here, a 20-year lease with the possibility of renewal is required.
The purchase process consists of five stages:
- Checking the property’s “cleanliness” through the public registry (Registro Público), which confirms the absence of encumbrances and the compliance of the boundaries.
- Deposit into an escrow account (usually 10% of the value) to secure the transaction.
- Execution of the purchase and sale agreement with a notary, with a mandatory translation into Spanish.
- Registration of ownership in the registry (5-7 business days).
- Transfer of the remaining funds to the seller.
It is recommended to engage an independent lawyer to assist with the transaction—their services will cost 1-2% of the property’s value, but will protect against fraud.
Rules
Property owners in Panama pay an annual property tax (0.5-1% of the cadastral value), which for properties under $120,000 is often a symbolic sum ($50-$200 per year). There is no capital gains tax on the sale of a property owned for more than two years, which distinguishes Panama from many Caribbean jurisdictions.
The Pensionado program is available for retirees from the United States: upon proof of a monthly pension of at least $1,000, benefits are available, including a 25% discount on utilities, a 50% discount on health insurance, and a tax exemption on imported furniture when moving. Operating costs include monthly security fees (in gated communities, $50-$150), utilities ($80-$200 for an 80 sq m apartment), and voluntary natural disaster insurance ($300-$500 per year).
Panama does not have an automatic exchange of financial information (CRS) agreement with the United States, but American citizens are required to report foreign real estate on an FBAR report if the value exceeds $10,000. Properly formalizing the purchase through a local lawyer and complying with FATCA requirements minimizes the risk of tax claims on both sides.
