Real Estate Titling, panama, offshore, asset protection, tax haven, real estate sales

REAL ESTATE TITLING SERVICES

DIAZ BARRETO LAW OFFICES

Foreigners, whether residents or non-residents, enjoy the same
rights and privileges when purchasing and selling real property as do
Panamanian citizens.

Foreign investors are given a 10-year stability guarantee that all legal,
tax, customs, municipal and labor rules will remain identical to those
in force at the time of the investment registration.

Law # 54 provides these guarantees: Foreign Investor Protection Law.

The first step is to find a Panama property you like, and negotiate the
price and terms of the sale with the seller (or Panama real estate
broker).

DIAZ BARRETO LAW OFFICES

Second, We handle the due diligence and title search on the property,
putting your Panamanian attorney in contact with the seller (or real
estate broker) to gather copies of the property title documents and
survey (if available).

Third, have your attorney prepare a written Promise to Buy/Sell
Contract to lock in the property sale and secure the terms agreed
upon (a deposit of 10% is usually required by the seller upon signing
the promise to buy/sell contract), plus this gives you time to do the
due diligence and get your funds into the escrow account.

Fourth, once the attorney has confirmed the property title is clean,
then the final closing is scheduled, where the buyer/seller sign the
final Buy/Sell Contract.

Fifth, payment is made to the seller, broker, and attorney from escrow
(in some cases, buyers/sellers agree that payment is made after the
public deed of the property is transferred and registered into the
buyers name).

Sixth, the Buy/Sell Contract is registered at the Public Registry where
they transfer the property title ownership from the previous owner to
the new owner.

PURCHASE OF POSSESSION RIGHTS

Possession rights are protected by Panama's national laws. They
represent a right to use and enjoy the property but not the right to
total ownership.

The purchase of real estate over which possession rights are held
must also be in writing and requires certain legal proceedings for its
due recognition on the part of the authorities.

Indeed, for its recognition, a series of proceedings allowing for their
preliminary registration as possession rights and a later conversion
into total ownership are required.

These proceedings include the surveying, inspection, requests, and
registration, finally granting a protected right in favor of the holder.

DIAZ BARRETO LAW OFFICES

OFFSHORE SERVICES PROVIDERS

Real Estate Titling

Panama Real Estate Taxes
(Capital Gains Tax)

There are annual taxes on the value
of real estate, plus capital gains tax
on profits from the sale of real
estate, and a transfer tax arising on
sale.

The annual tax, under Article 766 of
the Fiscal Code, is based on official
valuations, and is levied on a
sliding scale, previously:

1.75% from $30,000 (lowered to
$20,000 in 2005) to $50,000; plus
1.95% from $50,000 to $75,000;
and
2.10% on values above $75,000
Valuations under the 'cadastral'
system were updated in 2005, and
from 2006 the tax was based on the
new values at the following rates:

0.70% on any value exceeding
US$30,000 up to US$50,000;
0.90% on any value exceeding
US$50,000 up to US$75,000; and
1.00 % on any value in excess of
US$75,000.
Capital Gains Tax is levied on real
estate gains under Article 701 of
the Fiscal Code and Articles 89 and
90 of the Income Tax Regulations.
The rate of tax is 30% on the
taxable gain after deductions, but
the calculation basis is quite
complex, at least for persons not
otherwise paying much tax.

The tax on the transfer of real estate
(not new homes) is 2%, payable by
the seller, which is credited against
capital gains tax.

Incentives introduced in 2004 to
encourage development gave
savings on a $200,000 home over
20 years of $69,250 – or about one-
third of the purchase price of a high-
quality home. But they were finally
withdrawn on August 31, 2005, with
existing projects needing to be
completed within a year.

Residences with construction
permits issued after September
1, 2005 , however, benefited from
the following exemptions:

Value up to $100,000: 15 years
Value from $100,000 to $250,000:
10 years
Value over $250,000: 5 years
Land is not exempt and property tax
would continue to be paid on it if its
value is above $30,000.

DIAZ BARRETO LAW