ILN: BUYING AND SELLING REAL ESTATE - AN INTERNATIONAL GUIDE

[BUYING AND SELLING REAL ESTATE IN PANAMA]

184

registered with the Ministry of Agriculture and Development at no more than $150,000. The real estate tax basis should be understood as being the combination of the value of land and the improvements of the property, which includes any construction on the land, as appraised by Land Commission (Oficina de Catastro). Real estate transactions at prices surpassing the appraisal value are automatically registered with the new, higher value, and thus becomes the new basis for taxation. • Real Property Transfer Tax When a property is sold, the Real Property Transfer Tax is assessed and calculated on the greater of the total value, whether the sale price or the registered value, plus the value of the improvements. The tax rate is 2% of the greater of these two values, plus 5% for each year since owning the property. • Real estate taxes season in Panama occurs 3 times every year, at the end of April, August, and December. c) Financing • Local or Foreign Banks and/or Lenders are usually used to acquire / buy real estate in Panama, which secure the buying through a mortgage agreement with the buyer. Mortgages must be granted in the form of a public deed before a Notary Public in Panama and registered at the Public Registry to perfect the security interest. d) Leasing • Panamanian Civil Code regulates Leasing in Panama, which are divided in two categories: the first covers residential leases with a monthly rental fee up to US$150, and the second category

covers residential leases with a monthly rental fee of US$150 or more, as well as leases of premises for commercial, professional, industrial, or educational use (regardless of the amount of the rental fee). • A leasing agreement must include: The right of the lessee (in residential leases) to waive the minimum lease term, and terminate the lease agreement at any time (with a written notice sent at least 30 days prior to the termination date), the right to sub-lease, the obligation to deposit with the Ministry of Housing a sum equal to the agreed rental fee, the right of the lessee (in residential leases) to exercise his/her profession inside the leased property, unless it interrupts the peaceful enjoyment of the property or violates the law. Lease agreements must be registered at the Ministry of Housing; and also, as a public deed at a Notary Public (when its term exceeds six years) – being 20 years the maximum time period a lease agreement is permitted. Nevertheless, both categories of leasing could be registered at the Public Registry to inform potentially interested third parties.

e) Constructing

• In order to build in Panama, prior to the beginning of construction, the necessary plans must be accordingly signed by a professional who is duly licensed by the Technical Board of Engineers and Architects of the Ministry of Public Works; and then approved by the Directorate of Municipal Works and Constructions. • After the construction is finished, an application for an occupancy permit

ILN Real Estate Group – Buying and Selling Real Estate Series

Made with FlippingBook Online newsletter