Icaza, Gonzalez-Ruiz & Aleman
Can anyone (including foreigners) own and occupy real estate in your jurisdiction (including shares in property owning companies)? Are there any restrictions?
Foreigners can own and occupy real estate and can hold shares in property owning companies, with the exception of (i) insular lands which are only subject of concession by the government, in order to develop tourism projects and (ii) land located at a distance of less than ten (10) kilometers from any Panamanian border . If the owner of the land will be a foreign company, said company does not have to be registered in Panama.
Are there restrictions on lending for the purchase of real estate by foreign companies? If so briefly give an outline?
There are no restrictions on lending for purchase of real estate by foreign companies or individuals.
Please provide a short summary of the fees and costs (including tax) relating to buying real estate in your jurisdiction.
Costs will include fees of real estate agents, professional advisors fees (lawyers, etc), fees related to the appraisal of the property (optional), notarial costs, public registry fees and taxes. The notarial fees will depend on the length of the sale deed. The public registry fees are approximately 0.3% of the amount of the sale price. Taxes to be paid because of the transfer of a real estate are: 2% real estate transfer tax and 3% income tax (advance payment). Taxable bases for these taxes are as follows: for the transfer tax, the taxable base will be the greater value between the value agreed upon in the deed of sale or the property value (construction value plus improvements and an increase of 5% of this value per calendar year since the seller acquired the property until the date of sale); and for the income tax, the taxable base will be the greater value between the total sale value and the cadastral value (construction plus improvements) of the property. The law establishes that, the seller can choose between (i) the 3% income tax advance payment (the “3%”) and(ii) the 10% income tax rate applicable to the actual capital gain (the “10%”), as being the final applicable income tax. In case of the latter, the difference between the 3% and the 10% will be credited to the seller.
Are there taxes applicable to owning real estate and can the burden of the taxes be passed to someone else (e.g. a tenant or an occupier - not being the owner)?
There are applicable taxes to real estate owning which will vary in a progressive rate depending on the taxable base. The taxable base is the value of the land and construction value, plus any other improvements to the property. The progressive rate is calculated as follows:
a. 0% over the taxable base up to $30,000.oo
b. 0.60% over the taxable base which exceeds $30,000.00 up to $250,000.00.
c. 0.80% over the taxable base which exceeds $250,000.00 up to $500,000.00.
d. 1.00% over the taxable base which exceeds $500,000.00.
Are there tax breaks or other incentives for foreigners to buy real estate in your jurisdiction? If so what are they?
There are no tax breaks for foreigners when buying real estate, but there are some migratory residency categories that can be requested by foreigners as a result buying real estate in Panama. This program called Economic Self Solvency program allows foreigners to request permanent residency after three years in Panama under said program.
How is the ownership of Real Estate evidenced in your jurisdiction?
Through the Public Registry of Panama which registers through public deeds all purchase and sale agreements of real estate. The Public Registry digital system shows general information of the owner and seller of a real estate as well as general information of the property.
Is it possible to keep the identity of owners of real estate confidential in your jurisdiction?
Yes, it is possible to keep identity of owners of real estate confidential using a Panamanian company or a Panamanian private interest foundation. Panama approved in 2020 a law that requires to register, in a Single Registry of Final Beneficiaries, the beneficiary owners of any legal entity in Panama. This obligation includes real state owning companies. The Authority will keep the information confidential and can only be requested by competent authorities.