Real Estate Lawyer in Panama

Many things can go wrong when buying real estate in Panama

 Just to name a few:

• Liens on the property.

• Mortgages on the property.

• Past transactions that were not completed properly, which could lead to claims later on.

• Not all owners agreeing to the sale.

• The sellers not having gone through the proper courts to process their inheritance.

• Outright fraud.

• A house that needs to be legalized / was build illegally

Get a good real estate lawyer before moving forward with any real estate transaction in Panama. Also, be careful before using the lawyer that is recommended by your real estate agent. There is a potential for a conflict of interest. It’s always much safer to use your own real estate lawyer in Panama.

What are the transaction costs for a real estate sale in Panama?

The buyer must pay:

• His or her attorney
• Registration taxes and fees of about 0.5%

The seller must pay:

• His or her attorney
• A transfer tax of 3%
• Capital gains taxes

How are real estate capital gains taxes calculated in Panama?

Online you will find websites claiming that the seller must pay a flat 3% of the transaction value. This is technically correct during the transaction, but the seller can claim a lot of that money back; this 3% is just an advance.

The actual capital gains tax rate is 10%. If 10% of your actual capital gains (difference between purchase and sales price) is less than the 3% you had prepaid, then you can ask for the balance to be reimbursed during the next tax year.

Many people don’t do this because their Panama attorneys and accountants don’t care. But it can represent a decent chunk of change.

Meet Wi Men and Giovanna who have attorneys on their team to help with real estate transactions in Panama

Giovanna and Wi Men can also help you obtain residency in Panama.

 Other services in Panama:

Full transcript of Real Estate Lawyer in Panama

LADISLAS MAURICE: Hello, everyone. Ladislas Maurice from thewanderinginvestor.com. Today, I’m in Panama City with Giovanna and Wi Men who run a small family office here helping people with all their legal matters, obtaining residency, incorporation, etc. And we’ll be discussing real estate transactions from a legal point of view. How are you?

GIOVANNA: Good. You?

WI MEN: Very good, very good.

How long does a real estate transaction take in Panama?

LADISLAS MAURICE: Let’s say, I come here to Panama, I want to buy a condo, a house. I shake hands with the seller, we agree on a price. And then I call you. I say, “Hey, help me out with this transaction.” Typically, how long between that handshake and actually getting the title deed?

GIOVANNA: The process will take one to two months.

What fees does the buyer pay in Panama for a real estate transaction?

LADISLAS MAURICE: Can you tell me about the fees and taxes that both buyers and sellers have to pay in such a transaction?

WI MEN: In general, the buyer need to pay for the closing of the real estate transaction is the title closure and also the registration fees that depends the value of the property, of course, but let’s say, $300,000, usually, the registration fees is above of $1,500, not including the other fees involved with the notaries and the lawyer professional fees.

What fees does the seller pay in Panama for a real estate transaction?

LADISLAS MAURICE: Okay, so nothing too dramatic? Cool, what about the seller?

WI MEN: For the seller, need to pay the 2% of the transfer tax, and also the 3% of the property value tax. After the transaction is done, and the property is restored, and also in the tax office, this owner can actually apply with the tax office to claim a credit of the 10%, based on the 3% that has been retained before, that could be considered the minor value if the 10% is less than the 3% that initially the seller pay. So they can claim that back as a credit or cash. Of course, there’s a timeline, and the policy of the tax office depends on the scenario, they will give a timeline. It’s better to talk to the accountant to do this process.

LADISLAS MAURICE: Cool. Essentially, your accountants on your team can do this. Your lawyer’s accountants get together and figure it out.

WI MEN: Yes.

GIOVANNA: That’s correct.

LADISLAS MAURICE: Because, look, when you look online, you generally see a bit of registration taxes, a lot of people say 5% for selling fees. But it’s more complex than that. There are exemptions, a few loop holes. Sometimes, actually, it’s the buyer that has to pay taxes, depending on the structure of the property. It’s a bit complex, nothing is really straightforward. It’s not the end of the world, it’s very manageable. It’s not complicated for professionals. But when you first dig into it as a retail investor, it can be a little surprising, and it’s never as easy as what you see online. I think that’s a good way of summarizing, right?

GIOVANNA: That’s correct.

WI MEN: Yeah, that’s right.

Pitfalls of buying real estate in Panama

LADISLAS MAURICE: Cool. What are some of the typical issues when your lawyers start digging into the title deeds, etc., that they find that could be issues for buyers?

GIOVANNA: It’s very important to do the due diligence of the property, check if the property is not being seized by banks, or, like, it’s in the middle of a family lawsuit. It’s important to check if there’s taxes involved, pending taxes with the government, too. All these are part of the due diligence process that we do before purchasing property in Panama.

LADISLAS MAURICE: All right, fantastic. Look, the reality is you always hear stories of people getting played when they invest in real estate overseas, but that’s because they don’t use good lawyers to actually do the due diligence. I’ve done deals all over the world. I’ve never run into fundamental issues with title deeds, because I just hire reputable law firms and competent lawyers that understand foreigners. Because if you hire a local-local lawyer who never deals with foreigners, he might assume that you understand certain things, even though you don’t, because you’re not aware of how the market operates. It’s important to really choose lawyers that understand and that deal with foreigners.

If you’re about to go through a real estate transaction here in Panama, do feel free to get in touch with Giovanna and Wi Men. There’s a link below. They have lawyers and CPAs on their team who will be able to help you from A to Z. Giovanna, Wi Men, thank you very much.

WI MEN: Thank you very much.

GIOVANNA: Thank you very much.