Buy Panama real estate in 2024 as a foreigner: What you need to know

The real estate market in Panama in 2022 continues on its way to recovery with respect to the statistics prior to the year 2020. However, at present there is more activity in the sector both in the capital and in properties in the interior, particularly on the beaches.

As we have mentioned before, the potential of the real estate sector this year and in the future looks good, mainly because the economy of Panama has good recovery projections, in addition to good opportunities for new project properties, both apartments and second homes.

It is important to mention that for both the local buyer and the foreign buyer, the process of acquiring a property in Panama is very similar, since it is totally legal to buy a property on a personal basis, regardless of whether you live in the country or come from abroad.

However, here are some important tips that can clarify your doubts about whether a foreigner can buy a property in Panama in 2022 and, of course, help you to be more informed before making a decision:

Buy personally or through a corporation

Many buyers are in doubt as to whether it is better to buy an apartment or house in Panama as a personal title or through a corporation.

Generally, when a property is purchased through a partnership or corporation, when selling, renting or dealing with tax payments, the process is different from that of personal title, in addition to segmenting the responsibilities of the person or persons who own it, compared to that of the partnership or corporation.

Obviously, when creating a partnership or corporation, the shares can be divided by the buyers or if it is a single person, 100% of the shares would be assigned.

Panama Law of Friendly Nations and how it affects the purchase

The Friendly Nations Law is a special permanent residence permit that foreigners from some specific countries (those that have strong relations with Panama) are allowed to obtain. This law has certain conditions that must be met in order to enjoy the benefits, and it has been changed in 2021.

Due to this change, this law is highly correlated with real estate, since previously it was only required to create a company where the beneficiary had a title or director position.

Now, the person will have to present a Panama public registry document of a property. In it, the ownership of real estate must be in the name of the person or the legal corporation which the person owns, and the property must have a minimum value of $200,000.

Therefore, to enjoy this benefit, many foreigners are now acquiring properties at that value or higher, except for those who have a job offer in Panama, which can also enjoy this benefit.

Apply for a mortgage as a foreigner

The process to buy a property as a foreigner is quite simple if you plan to pay 100% to the seller. However, with a mortgage from a local bank it is totally different.

Although it is not impossible to obtain a mortgage as a non-resident foreigner in a Panamanian bank, the process is a bit more complicated and will depend on the person’s ability to pay.

The credit record of the country of origin of the foreigner generally does not add any value when applying for a mortgage in Panama, generally the local bank focuses on the ability to pay, that is, it asks the buyer to demonstrate their income in the country of origin and evaluate it together with the amount of mortgage loan to request.

These conditions (and the probability) of approval of course change if the foreigner is already a resident, much better if he is a permanent resident, and if he already has a credit record in Panama.