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Mortgages and Other Financial Issues

Panama - Mortgages and Other Financial Issues


There are a number of banks in Panama that will offer a mortgage to an expat. There are a number of criteria that an expat will need to meet before they will be offered a mortgage. The property that they want to buy must be registered with the Public Registry in Panama and must be in an approved region. Properties within 10 miles of the border cannot be purchased by expats. The property must have extras that add value, such as a garage and expats can only obtain a mortgage for up to 70% of the value of the property. No bank in Panama will consider lending above the asking price for the property so if you need additional monies for renovations this cannot be obtained on a mortgage.

If the property you wish to purchase meets these criteria then you can make an application for the mortgage. You will need to provide a copy of your passport (all the pages), a copy of another form of photo ID, letters of reference for your financial status (bank or employer), references from a professional or personal source (usually an employer or person of stature – letters from Panamanian nationals carry more authority), a photocopied utility bill which confirms the address given on all your other documentation, a copy of your CV, bank statements and tax returns going back two years, a copy of the survey and registered title deed of the home you wish to purchase, an original title deed from the Public Registry and a complete appraisal carried out by an approved company.

Mortgage loan rates are the same as those offered in the US and are often variable. The rate you are offered will take into account a number of conditions such as the type of property, the age of the property, the age and status of the applicant and any security which is offered to the bank.

First time buyers can also benefit from the generosity of the banks in Panama. There are often incentives to encourage people to buy for the first time and again, the buyer must meet a certain number of conditions. They must never have owned property in Panama before, these incentives only apply to newly built homes, the property can only be for residential use, the loan amount must fall between $25,000 and $62,000, loans for more than 95% of the property’s value are not permitted, the property must be a titled property and with the Public Registry of Panama and the loan cannot be for a period of more than 15 years.

The mortgage process tends to be fairly quick and providing you meet all the criteria you are unlikely to be turned down. Having a property appraised can cost anything between $150 and $1000 depending upon the type of appraisal that you have carried out.

Title insurance is something that is available to those who want to buy in Panama. This is valued at 1% of the property’s value and will usually be a minimum of $1000. This is not essential for obtaining a mortgage, but the majority of buyers will opt to have this in place.

There are tax exemptions which are available to expat buyers. The main one is the tax exemption rule for foreign buyers. Those who are purchasing a new home or a condo will not have to pay any tax on their property for the first 5-15 years, depending upon the area and the type of property.

Property tax is applied to any property that has a value of more than $30,000. Between $30,000 and $50,000 a tax of 1.75% is applied, this rises to 1.95% for properties worth up to $75,000 and 2.1% for anything above that value.

Capital Gains Tax is valued at 10% of the profit made on the sale of any property, but you need to have owned the property for a minimum of two years and not earn your living by buying and selling properties, otherwise different rates will apply.

There are no longer any inheritance taxes in Panama, so those who inherit property will not face a bill from the state. Gift tax may apply but only on property that is held in Panama.


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