[BUYING AND SELLING REAL ESTATE IN PANAMA]
KEY FACTS OF REAL ESTATE ACQUISITIONS UNDER PANAMANIAN LAW
1) Once you find a real estate property that you want to acquire by yourself or through a local real estate broker, it is strongly recommendable to hire a local attorney to perform a thorough due diligence on the property. 2) Once the due diligence is finalized, and the property is clear from any restriction that will impede its sale, you or through your broker, should negotiate the terms and conditions of the transaction, which will include the price and payment method. 3) The next step will be to subscribe a Promissory contract that will contain all the terms and conditions of the purchase/sale. 4) At the moment of the signing of the promissory contract, a down payment is given to the seller so that he may settle the taxes (5% of the higher value between the purchase price and cadaster value of the property) that generate the transaction. 5) Once taxes are paid by the seller and all the documents for closing are in place, the parties will need to sign before a local notary the final purchase/sale contract, which will be subscribed in a Public Deed. 6) The final step of the purchase/sale is to register the final purchase /sale contract in the Panama Public Registry, so that the transfer of the property can be consummated. Important Aspects: a) Registration Panama has a public system where all matters related to real estate are registered, including title, any improvement to the property, burdens, impediments, and limitations to ownership.
• When a real estate property is registered, it is assigned with a parcel number, which will be used to identify the specific property, as it will include information such as the name of the owner(s), its registered value, measures of its areas, borderlines and any boundaries which have been registered on the specific property. • Any person (foreign or national, natural, or legal entity) can hold real estate title in the Republic of Panama. To proceed with the acquisition of a real estate, the buyer will register the title under his/her/its name, with the registration of a Public Deed at a Public Notary office, which includes the Purchase & Sale Contract, and by paying the correspondent taxes to the Panamanian Tax Authority. • The registration of this public deed at the Public Registry is obligatory for the transfer to be executed. b) Taxes The following is intended to provide basic information about taxes related to the most common real estate transactions, and any tax liabilities enquiries should be handled on a case-by-case basis. • Property Tax (Impuesto de Inmueble) Real estate in Panama, whether in urban or rural areas, is subject to property taxes. • All properties registered at a value of $30,000 or less, including improvements of land, for instance, construction.
Land for agricultural purposes like farming and occupied exclusively
ILN Real Estate Group – Buying and Selling Real Estate Series
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