Frequently Asked Questions

  1. Where is Panama?
  2. Is Panama Safe?
  3. Will I have a problem because I don't speak Spanish?
  4. Do I need a Visa to visit Panama?
  5. How stable is the Government?
  6. What is the currency?
  7. What is the Sales Tax in Panama?
  8. How do I open a bank account in Panama?
  9. How do I go about retiring in Panama?
  10. Do they have internet service there?
  11. What about cell phone service?
  12. What is the cost of living like there?
  13. What is the weather like in Panama?
  14. What is the economy like in Panama?
  15. Do they have modern medical facilities in Panama?
  16. Can I drink the water?
  17. Do I need an adapter for the electricity in Panama?
  18. What is the population in Panama?
  19. Which is better the Pacific or the Caribbean to purchase real estate?
  20. Are there earthquakes and/or hurricanes in Panama?
  21. Is it safe to buy real estate in Panama?
  22. Is it legal for me to buy real estate in Panama?
  23. How do I buy real estate in Panama?
  24. Should I get a corporation to put my property in?
  25. How much will it cost to set up a corporation and how do I set one up?
  26. Are there taxes when buying or selling property in Panama?
  27. How much will I pay for closing costs if I buy in Panama?
  28. Can I get access to the beach if I buy property across the road from the beach or ten minutes away from the beach?
  29. Is it possible for my land to be land-locked?
  30. What are the property taxes like in Panama?
  31. Is there a way to minimize my capital gains when I sell?
  32. Can I get a mortgage in Panama?
  33. What do I need in order to apply for a mortgage in Panama?
  34. What are the interest rates?
  35. What is Rights of Possession?
  36. If I buy real estate in Panama will I be able to rent it out?

1. Where is Panama?

Panama is the most southern country in South America which is between North and South America. It covers 75,517 sq. km or 29,208 sq miles. It is 50 miles wide at the narrowest point and no wider than 120 miles at its widest. It has 1,288 km or 805 miles of Caribbean beachfront and 1,701 km or 1,063 miles of Pacific beachfront.

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2. Is Panama Safe?

Panama is one of the safest countries in the world and probably the safest in Latin America, according to a Pinkerton Intelligence Agency report. As with any country there are areas that experience more crime and it is recommended that tourists avoid these areas. Generally speaking though, Panama is considered a safe place for the tourist to travel and/or to live.

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3. Will I have a problem because I don't speak Spanish?

Although Spanish is a first language in Panama, the second language is English. Americans lived in the Panama Canal area for over 100 years and many Panamaians are comfortable with the English language. Of course there are more people that speak English in the city of Panama than there are in the outlying areas.

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4. Do I need a Visa to visit Panama?

You will need a passport to travel to Panama and a Panamanian Tourist card which the airlines will supply to you during your flight. As in any foreign country, it is a good idea to carry your passport at all times while travelling in Panama, particularly while in the Free Trade Zone.

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5. How stable is the Government?

Panama is a Democratic society with an elected President and two Vice Presidents. In 1989, with the U.S. military stationed along the Panama Canal to protect the waterway, the U.S. invaded Panama to dislodge General Manuel Noriega who had positioned himself as head of the country and was believed to be involved in drug smuggling. Noriega received a 40 year sentence for his crimes and was exiled from the country. In 1999 the U.S. released the control of the Panama Canal back to the Panamanian government. Today Panama's government is a democracy and one of the most stable in Latin America.

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6. What is the currency?

The currency is the Balboa in Panama. It has the same value as the U.S. dollar. Panama does not produce paper money, but rather coins in the equivalent of 1¢, 5¢, 10¢, 25¢, and 50¢. The U.S. dollar is widely accepted as the standard mode of currency.

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7. What is the Sales Tax in Panama?

The sales tax in Panama is currently 5%.

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8. How do I open a bank account in Panama?

In order to open a bank account in Panama you will need your passport along with another proof of identity such as a driver's licence. Also you will need a letter of reference from your bank in your home country. The letter should state that you have been a member at this bank for so many years and that you have conducted business in a satisfactory manner. You will also need to fill out the required paperwork to open a bank account at the branch you wish to open the account. You will need to be in Panama to sign the paperwork for this application. If you cannot be in Panama you can get your Panamanian lawyer to open the account for you, for a small fee (usually around $400). You will be approved for the account in about 4 banking days for a personal account and about a week for a business account. In order to open a business account you will need all of the preceding information plus the original copy of the articles of incorporation for the company.

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9. How do I go about retiring in Panama?

In order to get a Retirement Visa in Panama you will need to hire a lawyer. You will need to have a medical exam and be free of AIDS and to have an up to date passport. For more information Retirement Benefits in Panama.

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10. Do they have internet service there?

Actually Panama is quite advanced in the modern technology involving the internet and fiberoptics. There are both ADSL, cable modern and wireless services available.

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11. What about cell phone service?

Of course cell phone use is quite common in Panama and you can use some cell phone services from your home country in Panama. Check with your service provider to see if they have service in Panama. There are SIM cards available in Panama for travellers. A reasonable alternative to either of these methods is to purchase a phone in Panama (for about $30) and buy time for it. This way you can pay as you go and if you are a frequent flyer to Panama, this is a very economical way to go.

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12. What is the cost of living like there?

The cost of living in very reasonable in Panama and many foreigners retire there for that reason. A couple can live there quite comfortably for about $1200 a month including a live-in maid and gardening service two days a week. For more on the cost of living in Panama.

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13. What is the weather like in Panama?

Panama has a tropical climate. Year-round temperature is 80-90 degrees Fahrenheit or 25-30 celsius. Panama has two main seasons. The Dry Season (December to mid-April) and the Rainy Season (mid-April to December). In the Rainy season the rain comes in sudden short downpours lastingabout 1-2 hours and are followed by sunshine. The average rainfall is 150 cm along the Pacific coast and 250 cm on the Caribbean side. The highlands enjoy spring-like climate all year round, with cooler nights.

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14. What is the economy like in Panama?

Panama is very much a service orientated country. With the Free trade Zone and The Panama Canal Panama has become a highly desirable place to do business. Other major sources of growth in Panama have been in the banking industry, legal services and agriculture. Bananas, coffee and seafood are high on their list on exports in the agricultural sector.

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15. Do they have modern medical facilities in Panama?

Panama has very modernized medical facilities with many of the health care professionals trained in the U.S. Panama also has a John Hopkins Center. The medical services are of high quality at a very reasonable price.

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16. Can I drink the water?

Panama is known for its clean water and has bottled water on its list of exports. In the city of Panama it is safe to drink the water as well in most of the outlying areas. As a traveller it is suggested that if you are not sure you should purchase bottled water.

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17. Do I need an adapter for the electricity in Panama?

Panama uses the same voltage and outlets as North America and so you can use many of your own appliances. Some areas of Panama may not have the modern three-prong plug sockets so beware of this and bring an adapter just in case if you plan on using an appliance that requires a three-prong plug.

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18. What is the population in Panama?

The population in Panama is approximately 2.8 million with around 835,000 living in Panama City.

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19. Which is better the Pacific or the Caribbean to purchase real estate?

This would be your own personal preference. It is worth mentioning that the Caribbean side receives much more rain in the rainy season than the Pacific side. At the present time the Caribbean side is very much under-developed and may be some time before the infrastructure is in to make it worth your while investing in. On the Pacific coasts the preferred beaches and areas to live in are the Playa Blanca area, Santa Clara, Punta Chame and the Pearl Islands. On the Caribbean the preferred areas would be Isla Grande, Bocas Del Toro and the San Blas Islands.

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20. Are there earthquakes and/or hurricanes in Panama?

Panama is the only country in Central America that is hurricane and earthquake free.

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21. Is it safe to buy real estate in Panama?

It is perfectly safe to purchase real estate in Panama. There are over a dozen laws in Panama specifically designed to protect foreign investments. Thousands of foreigners own property in Panama.

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22. Is it legal for me to buy real estate in Panama?

It is totally legal for a foreigner to own property in Panama. We recommend that foreigners hold the property in the name of a Panamanian corporation for the purposes of asset protection and tax reasons.

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23. How do I buy real estate in Panama?

Once you have found a property to purchase in Panama it is recommended that you retain a lawyer to take care of the title search and prepare a "Promise To Purchase" contract. It is not recommended that you buy property that is "Rights of Possession"(not titled) unless you really know what you are doing. It is customary to make a 10% deposit with the "Promise to Purchase" contract.

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24. Should I get a corporation to put my property in?

There are many benefits to putting the property under a corporate name. By so doing when you go to sell the property you simply sell the shares saving you the 2% land transfer tax and possible Capital Gains Taxes. The purchaser of the corporate shares (receiving all rights to the property in this case) saves closing costs as the property does not have to be publicly registered and also benefits from lower property taxes.

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25. How much will it cost to set up a corporation and how do I set one up?

In order to set up a corporation you should retain a lawyer. The cost is about $1000 to set one up and $250 in taxes each year.

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26. Are there taxes when buying or selling property in Panama?

The Panamanian government charges a 2% land transfer tax when a property is sold. This tax is paid by the seller. If you have registered the property under a corporation you can avoid this tax. See Should I get a corporation to put my property in?

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27. How much will I pay for closing costs if I buy in Panama?

The closing costs would include: 1) Legal transaction fee of about $600, including title search, Promise to Purchase contract, closing and property title transfer service. 2) Incorporation fee of about $1000. 3) Public Registry Transfer fees of about $200. If the property is already set up under a Panamanian corporation you would purchase the shares and save the cost of setting up the corporation and the cost of the Public Registry transfer fees.

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28. Can I get access to the beach if I buy property across the road from the beach or ten minutes away from the beach?

No one can actually own the beachfront in Panama up to 22 meters from the high-tide line. The beach in this area of 20 meters is considered to have public access. There are laws in Panama therefore regarding allowing beach access for oceanfront owners.

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29. Is it possible for my land to be land-locked?

In Panama the law states that no one can land-lock someone elses property. It is understood that if you own property and are blocking road access to someone else you must supply them access. This does not mean that you will have to supply and pay for a road through your property for them to access their property, but rather you must specify to them where you would supply them the easement for them to put in a road.

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30. What are the property taxes like in Panama?

The government has offered a 20 year tax exemption to anyone purchasing any real estate that is new construction in Panama. Otherwise property taxes are levied on any property registered over $30,000. The property taxes are 2.1% of the registered value of the property. Most of the property in Panama is registered for much less than the actual purchase price of the property.

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31. Is there a way to minimize my capital gains when I sell?

Generally there is a 10% Capital Gains tax realized when property is sold in Panama. To avoid this tax the most common strategy is to sell the shares of a corporation that owns the property. By doing so there is no registry at the Public Registry office which is where the capital gains tax is triggered. The corporation simply changes shareholders and the new owner simply changes the board of directors to take control of the corporation.

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32. Can I get a mortgage in Panama?

Yes you can get a mortgage in Panama. Generally banks will finance up to 70% of the purchase price or the appraised value of the property.

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33. What do I need in order to apply for a mortgage in Panama?

In order to apply for a mortgage you will need the following:

  1. Photocopy of your passport
  2. Photocopy of a picture ID such as Driver's licence
  3. A financial reference letter from your home bank
  4. Last two years personal tax returns
  5. Appraisal on property
  6. Mortgage application forms filled out

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34. What are the interest rates?

The interest rates are usually reflective of the interest rates paid in the U.S.

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35. What is Rights of Possession?

Right of Possession means that the government owns the property in which a Panamanian person or Panamanian corporation has right of use of. This property can be titled but it can take up to two years for this process. We suggest that you do not purchase property that is Rights of Possession unless you will be involving lawyers and you are a seasoned investor in Panama.

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36. If I buy real estate in Panama will I be able to rent it out?

Yes you will be able to rent property out in Panama. Many investors purchase property in Panama and only spend a limited length of time there each year. You can hire a property management company to take care of the rentals for a percentage of the rental income. If you are interested in renting out your property please contact us for more information.

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