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Overview of Real Estate Purchase Costs in Panama
Panama has emerged as a sought-after destination for international property buyers, offering a mix of tropical beauty and modern living. Whether you’re eyeing a city apartment, a serene mountain home, or a beachfront retreat, understanding the costs involved is crucial. This guide breaks down the key expenses and steps in purchasing property in Panama.
Example Cost Breakdown: $300,000 Property Purchase
Scenario: Buying a $300,000 property with an appreciation of $30,000.
| Cost Item | Buyer | Seller |
|---|---|---|
| Property Price | $300,000 | – |
| Notary Fees | $250 | – |
| Registry Fees | 1% of property value ($3,000) | – |
| Express Service (optional) | $250 | – |
| Lawyer’s Fees | 1.5% of property price ($4,500) | – |
| Escrow Services | $1,000 (variable) | – |
| Miscellaneous Costs | $500 (translation) | – |
| Corporation Setup | $2,300 (initial) | – |
| Corporation Maintenance | $900 (annual) | – |
| Capital Gains Tax | – | 3% of $30,000 ($900) |
| Transfer Tax | – | 2% of property value ($6,000) |
| Real Estate Commission | – | 5% of property value ($15,000) |
Estimated Total Costs:
- Buyer: $9,500 – $15,000 (including corporation setup)
- Seller: $21,000 (transfer tax and commission)
Breakdown of Key Costs
1. Notary and Registry Fees
- Notary Fees: $250 – $400 for document notarization.
- Registry Fees: 1% of the property value, with a minimum of $250.
- Express Service (optional): $250 for expedited deed registration.
2. Legal Fees
- Lawyer’s Fees: 1%-2.5% of the property value, covering contract drafting, due diligence, and closing representation.
- Due Diligence: Ensures the property is free of liens or encumbrances. Costs are often included in legal fees.
3. Additional Considerations
- Using a Corporation:
- Initial setup: $2,000 – $3,000.
- Annual maintenance: $700 – $1,200.
- Benefits include easier ownership transfer and potential tax advantages.
- Escrow Services: $1,000 (variable) for secure fund handling.
- Miscellaneous Costs: $500 for certified translations of legal documents.
4. Taxes
- Capital Gains Tax: 3% of the property’s appreciation (paid by the seller).
- Transfer Tax: 2% of the property value or cadastral value (whichever is higher, paid by the seller).
5. Real Estate Commission
- Typically 5% of the sale price, paid by the seller. Remote or unique properties may incur higher commissions.
Conclusion
Investing in Panama’s real estate market offers access to diverse property options at competitive prices. Understanding the associated costs, working with experienced professionals, and conducting thorough due diligence are essential for a smooth purchasing process. With the right approach, buyers can secure their ideal property in Panama’s vibrant market.
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About the Author:
Lic. Karen Dorcy is a seasoned Panamanian lawyer with over 15 years of expertise in real estate and business law.
Disclaimer:
The information provided is based on typical scenarios and may vary. Consult with local professionals for tailored advice on your specific transaction.