Buying property in Panama: A complete guide for expats

Panama has emerged as one of Central America's most attractive destinations for property investment and appears as #10 on our list of Low-Tax Countries in 2025. Thanks to its stable economy, dollarized currency, and favorable tax environment, many expats are looking to Panama for their next home or investment property. This comprehensive guide will walk you through everything you need to know about purchasing property in Panama.

Key takeaways:

• Foreigners enjoy almost the same property rights as Panamanian citizens.

• The buying process requires careful legal guidance and due diligence.
• Panama offers attractive tax incentives for property owners.
• Financing options exist but differ from those in the US.
• US citizens must report foreign property holdings to the IRS.

Can expats legally buy property in Panama?

Yes, foreigners can buy property in Panama with nearly the same rights as Panamanian citizens. Panama has some of the most expat-friendly real estate laws in Latin America, making it an appealing destination for expats seeking to invest in property abroad.

Foreign ownership laws

Panama's constitution guarantees the right to private property, and this protection extends to foreigners in nearly all cases. You can purchase most types of real estate directly in your own name, including:

• residential properties (houses, condos, apartments)
• commercial buildings
• undeveloped land (with some restrictions)
• islands (with government approval)

Property rights and restrictions

While the purchasing process is straightforward, there are a few important restrictions to be aware of:

• Titled land vs. Right of Possession (ROP): You should focus on fully titled property rather than ROP land, which carries significant legal risks.
• Restricted zones: Properties within 10km of international borders cannot be owned by foreigners.
• Beachfront limitations: The first 22 meters from the high tide line is considered public domain and cannot be privately owned.

For US citizens buying property in Panama, it's important to verify that any property you're considering isn't in a restricted zone. Working with a reputable local attorney specializing in real estate transactions is strongly recommended.

Requirements for residency

The good news is: You don't need to be a resident to buy property in Panama. However, owning property can help you qualify for residency through Panama's Friendly Nations Visa program or the Panama Real Estate Investor Visa, which requires a minimum investment of $200,000.

Many Americans buy property in Panama without becoming residents, using their properties as vacation homes or rental investments. However, if you plan to live in Panama full-time, obtaining residency will simplify many aspects of life, including banking and accessing local services.

About the Panamanian real estate market

The Panamanian real estate market has matured considerably over the past two decades, offering a diverse range of options for foreign investors across various price points and property types.

Market trends and demand

Panama's real estate market continues to show resilience and growth potential despite global economic fluctuations. Key trends include:

• steady appreciation in prime locations (4 - 6% annually)
• growing demand for eco-friendly and sustainable housing
• increasing interest in properties outside Panama City
• rising popularity of pre-construction purchases

The market is particularly attractive to expats due to relatively low property taxes, plenty of tax exemptions available (with the proper guidance), and overall affordability compared to similar tropical destinations.

Which regions are popular for expats?

Panama City remains the beating heart of the country's real estate activity, offering high-rise luxury condos, historic properties in Casco Viejo, and family homes in suburban areas. The city appeals to working professionals and investors seeking rental income.

Coronado and the Pacific Beaches, aka the Gold Coast, offer beachfront and near-beach properties at various price points. Around an hour from Panama City, this area has developed into an expat hub with excellent amenities.

Boquete in the western highlands provides a temperate climate and mountain views. This area attracts retirees and those seeking a more relaxed lifestyle away from the coastal heat.

Other up-and-coming areas worth considering include Pedasi on the Azuero Peninsula and Bocas del Toro on the Caribbean side.

Coast vs Urban vs Rural properties

The type of property you choose significantly impacts both lifestyle and investment potential:

• Coastal properties typically command a premium but offer strong rental potential and appreciation. Beachfront condos and homes are particularly popular among US citizens looking for vacation properties.

• Urban properties in Panama City provide convenience and potentially strong rental returns, especially in areas like Costa del Este, Punta Pacifica, and El Cangrejo.

• Rural properties offer more land at lower prices, but may come with infrastructure challenges as well as a longer distance to amenities. Many buyers choose to buy land in Panama's countryside for retirement homes or agricultural projects.

Each area has its unique character and investment profile, making Panama's real estate market versatile enough to accommodate most preferences, requirements, and budgets.

The property buying process in Panama

Purchasing property in Panama follows a relatively straightforward process, though it differs in important ways from buying a house in the United States or Europe.

Choosing a location

Before diving into property searches, determine your priorities:

• budget constraints
• desired lifestyle (urban, beach, mountain, etc.)
• infrastructure needs (internet, healthcare, transportation)
• proximity to the international airport
• rental potential (if it's an investment)

Visit multiple areas before making a decision, as Panama's regions vary dramatically in climate, culture, and amenities.

Finding a real estate agent and property listings

Unlike the US, Panama doesn't have a centralized MLS (Multiple Listing Service), meaning a knowledgeable agent is all the more valuable. When selecting an agent:

• Look for experience working with US expats.
• Verify their licensing and professional associations.
• Ask about their knowledge of the specific locations you're interested in.
• Request references from past clients, particularly fellow expats.

Making an offer and signing a preliminary agreement

Once you've found a property:

1. Make a verbal offer through your agent.
2. Negotiate terms (price, included furnishings, timeline).
3. Sign a Promise to Purchase (Promesa de Compraventa).
4. Pay a deposit (typically 10% of the purchase price).

The Promise to Purchase protects both parties and outlines the conditions of the sale, including the closing timeline and any contingencies.

Title verification and due diligence

This phase should never be rushed, no matter how excited you are to move. Your attorney will:

• Verify the property title is clean and free of liens (debts).
• Confirm property boundaries match official records.
• Check for any easements or encumbrances.
• Verify that the seller has the legal right to sell.
• Review homeowners association rules and fees, if applicable.

NOTE! Title insurance, while not very common when buying property in Panama, adds an extra layer of protection from loss if there are issues with the property documentation.

Sealing the deal

The closing process involves:

1. Signing the final purchase agreement (Escritura Pública) before a Panamanian notary.
2. Paying the balance of the purchase price.
3. Registering the property with the Public Registry.
4. Paying transfer taxes and registration fees.

The entire process typically takes 30–90 days from accepted offer to completed registration, depending on complexity.

Legal considerations and required documents

Navigating the legal aspects of buying real estate in Panama requires proper guidance and attention to detail, any mistakes made now can become huge issues in the future when you look to sell.

Do you need a local lawyer? 100% yes

While Panama's property laws protect foreigners, the legal system and procedures differ significantly from those in the United States. A qualified Panamanian attorney specializing in real estate will:

• protect your interests throughout the transaction
• identify potential issues early in the process
• navigate language barriers in documentation
• ensure proper fulfillment of all legal requirements
• facilitate communication with government offices

Your attorney should be independent from your real estate agent and the seller, to avoid any conflict of interest.

What documents are involved?

When purchasing property in Panama, you'll need:

You'll also need your passport and usually a taxpayer identification number (RUC for foreigners).

Language of contracts and certified translations

All official property documents in Panama are in Spanish. While you may negotiate using English contracts, the final Escritura Pública will be in Spanish. You have a couple of options:

• having bilingual documents prepared
• hiring a certified translator
• working with a bilingual attorney

Never sign documents you don't fully understand, regardless of assurances from other parties.

Common legal risks

These are the most frequently reported issues:

• Unverified property titles: Especially in rural areas or islands.
• Building code violations: Particularly in older properties or those with unpermitted additions.
• Boundary disputes: Common with undeveloped land.
• Easement issues: Rights of way that may not be immediately apparent.
• HOA or building regulation surprises: Unexpected restrictions on property use.

Your best protection against these potential problems are both thorough due diligence and professional legal guidance.

Financing options for foreign buyers

Understanding your financing options is crucial when buying a home in Panama, as they differ significantly from what you might be accustomed to in your home country.

Can foreigners get loans for property in Panama?

Yes, foreigners can obtain mortgage financing in Panama, but with some notable differences:

• loans typically cover 60–70% of the property value (versus up to 90–95% in the US)
• interest rates are higher than in the US and Europe (typically 5–7%)
• loan terms are shorter (15–20 years is common, versus 30 years in the US)
• the application process is more demanding for non-residents

Several Panamanian banks work regularly with foreigners, including Banco General, Scotiabank, and Banistmo.

Panama mortgage requirements

To qualify for a mortgage in Panama, you'll typically need:

• proof of income (tax returns, bank statements)
• credit references from your home country
• personal financial statements
• proof of assets
• life insurance policy that covers the loan amount
• fire insurance for the property

US citizens will find the documentation requirements similar to those in the States, but expect a longer approval process, which is 60–90 days on average.

How to use retirement funds to buy in Panama

Some US citizens buy property in Panama using their retirement funds through:

• Self-directed IRAs: These allow investment in foreign real estate.
• 401(k) loans: Borrowing from your retirement plan (though this has tax implications).
• Cash distributions: Taking money out of retirement accounts (subject to taxes and potential penalties).

Each approach has significant tax implications, so consult a US tax professional experienced in international transactions before proceeding.

Alternatives to local financing

Many expats opt for alternatives to Panamanian bank financing:

• Cash purchases: The simplest approach, eliminating financing challenges.
• Seller financing: Some property owners offer financing directly.
• Home equity loans: Using equity in US properties to finance Panamanian purchases.
• Developer financing: Some new developments offer attractive payment plans.

For investment properties, consider forming a Panamanian corporation to hold the property, as this can provide additional financing options and tax benefits.

Taxes and fees you should know about

Along with our Panama tax guide, we share our understanding of the tax implications of owning property in Panama so that you can make the best investment decisions.

Transfer tax and capital gains

When purchasing property in Panama, you'll encounter these one-time taxes:

• Transfer tax (2%): Calculated on either the property's registered value or the sale price, whichever is higher
• Capital gains tax:
  When selling, you'll pay either:
  • 10% of the capital gain (profit), or
  • 3% of the gross sale price as an advance payment of income tax

For US citizens, any capital gains may also be taxable in the United States, though foreign tax credits may offset some of this liability.

Property tax obligations

Panama's property tax rates are notably low compared to many countries:

Many properties qualify for property tax exemptions, particularly new construction (exemptions typically last 5–20 years, depending on value).

Legal fees and final closing costs

Budget for these additional expenses when buying real estate in Panama:

• Legal fees: 0.5–1% of purchase price
• Notary fees: 0.1–0.25% of purchase price
• Registration fees: 0.2% of purchase price
• Real estate agent commission: 5–7% (typically paid by seller)

As a good rule of thumb, closing costs generally amount to around 3–4% of the purchase price.

Possible extra ongoing costs of ownership

Beyond property taxes, you should factor in ongoing expenses. These include:

• homeowners association fees (for condos and gated communities)
• property management fees (10–15% of rental income if renting out the property)
• utility costs (generally lower than in the US)
• home insurance (hurricane and earthquake coverage are recommended)

It’s important to consider that as a US citizen, you must report worldwide income and certain foreign assets regardless of where you live.

Tips for a safe purchase and negotiation culture

It can be tricky navigating cultural differences and protecting yourself from potential legal and financial pitfalls when purchasing property in Panama as a foreigner.

Have a team of trusted professionals

Building a reliable team is your best protection when investing in Panamanian real estate:

• Real estate attorney: Choose one who specializes in foreign transactions and is independent from your agent or the seller.
• Licensed real estate agent: Look for membership in ACOBIR (Panamanian Association of Real Estate Brokers).
• Accountant: Familiar with both Panama and your home country's tax laws.
• Property inspector: Unlike in the US, inspections aren't standard practice but are highly recommended.

Ask for recommendations from other expats, as personal referrals are valuable in Panama's relationship-based business culture.

Negotiating in Panama

The negotiation process in Panama differs somewhat from North American and European practices:

• Initial pricing: Properties are often listed at 10–20% above the expected selling price.
• Timeframe: Negotiations typically take longer than in the US.
• Relationship-building: Personal rapport with the seller can be as important as the financial offer.
• Flexibility: Be prepared to compromise on terms beyond just price.
• Direct communication: While politeness is valued, clear communication about your bottom line is respected.

Be wary of scams and fraud

When buying property in Panama, you should watch for these warning signs:

• Pressure to close quickly without proper due diligence.
• Reluctance to provide documentation or allow independent verification.
• Unusual payment structures or requests for wire transfers to personal accounts.
• Dramatically below-market prices without a clear explanation.
• Sellers or agents who discourage legal representation.
• Properties without clear titles, especially in areas with historical land disputes.
• Verbal promises that are not reflected in written agreements.

NOTE! Never make payments outside of official channels, and always insist on proper documentation for every aspect of the transaction. If something feels off or too good to be true, it probably is.

Remember that the best place to buy real estate in Panama depends on your specific needs and purposes, so take time to research thoroughly before committing to a purchase.

How can we help you navigate property investment in Panama

Purchasing property abroad involves complex tax considerations that extend beyond the transaction itself. Our team of experienced expat tax professionals can help you:

• understand FBAR and FATCA reporting requirements
• structure your property purchase for optimal tax efficiency
• ensure compliance with both US and Panamanian tax laws
• plan for future property sales or transfers