Investing abroad can be challenging, but PanamaKeys is here to make that process a breeze. What do you need to know about the Panama real estate market? Consider these 10 FAQs
1. How is the Panamanian economy performing?
The Panamanian economy is on-target to increase by more than 6% in 2016. Since 2013, the Panamanian economy has grown at an average 6% yearly. Compare this to the average 2% growth in the US for the same period.
2. How is the real estate sector performing in Panama?
The Panama real estate sector grew 8% in 2015, above the country GDP growth of 6%. Panama is known as the Dubai of Latin America because of the great number of housing and business development projects.
3. Can foreigners purchase real-estate safely?
Foreigners and expats can safely invest in Panama real estate, purchasing titles either under the investor’s name or using a private corporation, whether local or foreign.
4. What are the interest rates in Panama for property financing?
Interest rates vary according to type of property, age, economic status, loan term, among other factors. For instance, the purchase of a beach house has an interest rate of 5.75% + 1% from FECI (Interest Compensation Fund). Although locals are finance up to 85%, foreigners are usually required a 30% down payment.
5. What are the trendiest spots in Panama for investment?
There are many spots for those interested to invest in Panama real estate. In the City, the most popular spots include Punta Pacifica, Obarrio, Avenida Balboa, or Bella Vista. While Panama City rivals any major city from a first-world country, the countryside has many other advantages that make it a preferred choice for investors. Popular spots in the countryside include Boquete, Volcan, David, and beaches such as La Barqueta.
6. Do foreigners require any special documentation in order to invest?
Foreigners do not require special documentation, other than proof of identity like a passport. United States citizens must comply with FACTA governance. For legal reasons such as the recent Know Your Customer laws that Panama has implemented to comply with FACTA, banks or lawyers may require a proof of sources for foreign funds. If the investor desires, he can open a local company to register the property title. This would require straight-forward legal paperwork.
7. Are there any tax exemptions for properties?
Panama real estate enjoys a lifetime exemption for properties valued in the public registry under $30,000. Improvements made on properties have in the past qualified for different incentive programs, ranging anywhere from 10 years to 20 years of exemption on the improvements. After the term of any exemption period expires, annual property taxes vary but are generally around 2% of the inscribed value of the property. Usually, as in the United States, the inscribed or tax assessment value of the property can vary greatly between the current market value.
8. Are there any issues mobilizing capital?
Panamanians enjoy a US-dollar economy, with no capital transfer restrictions. There is a wide variety of financial entities providing services to transfer capital from abroad or to another country. So long as you are willing and able to verify the source of your funds and can provide a believable reason for transferring the money into the country, such as investing in real estate, you will be able to transfer your funds into Panama fairly easily. PanamaKeys stands ready to assist you with as well, pointing you in the direction of quality attorneys and bank representatives.
9. Where does Real Estate fall in the Government’s priorities?
The government currently has a focus to develop 4 sectors in Panama: Logistics, Agriculture, Tourism, and Financial Services. Logistics includes the continuous development of the Panama Metro system, designed to ease the vehicle traffic problems that Panama City is experiencing thanks to the rapid growth we’ve experienced as wages have increased and the middle class continues to expand. Agriculture includes paved roads in the countryside. In tourism, the development of real estate for foreign investors and incentives to make investing in Panama attractive to foreign investors. In Financial Services, Panama is committed to making the country to go-to choice for investors the world over, and the financial services sector here is quite elaborate and sophisticated to reflect that. Panama will remain a top choice for investment and asset protection for years to come.
10. Since Spanish is the official language, are contracts available only in Spanish?
You won’t have to worry about language issues, since Panama has become more bilingual and trilingual to effectively communicate with people from other countries now living in Panama. Therefore, if a contract in English is needed, a translated version at closing will be delivered.
Investing abroad can be challenging, but PanamaKeys is here to make it a breeze. We will help you navigate the choppy waters of investing abroad and put you on the course to smooth sailing. What questions can we help answer? Unlock your future in Panama, contact us today!
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