Navigating the path to residency in Panama through real estate investment can seem daunting, but it presents a unique opportunity for foreigners. This guide simplifies the process, detailing the types of visas available, including the sought-after Golden Visa, and outlining the steps for buying property as a foreigner. It also highlights the benefits of Panamanian residency, from financial incentives to lifestyle perks. Whether you’re an expat seeking a new home or an investor exploring opportunities, this piece provides essential insights into making Panama your residence through a strategic property investment.
Type of Visa Available Through Real Estate Investment
Panama offers a program known as the “Golden Visa Panama,” also referred to as the “Red Carpet Visa,” which grants permanent residency to individuals who meet specific investment criteria in Panama, including real estate purchases. Let’s delve into the requirements and the steps on how to obtain a Panama Golden Visa.
A. Requirements for the Panama Golden Visa
To be eligible for permanent residence through this program, applicants must choose one of the following three investment pathways:
1. Qualified Investor
To maintain permanent residency, individuals are required to hold their investment for a five-year period and visit at least once every two years. The investment options include:
- Investing $300,000 in real estate.
- Investing $500,000 in securities through the Stock Exchange of Panama.
- Depositing $750,000 in a fixed bank deposit.
2. Friendly Nations
For citizens of countries considered “friendly nations” by Panama, the options for obtaining residence include:
- Making a real estate investment of $200,000.
- Placing a fixed-term deposit of $200,000.
- Securing employment with a Panamanian company, allowing for residence based on labor reasons.
3. Forestry Investor
The Reforestation Visa is a great option for citizens of countries who are NOT on the Friendly Nations List. Panama presents two distinct pathways for acquiring residency through investment in a reforestation project: the Express Process and the Regular Process.
- Express Process:
Investors seeking permanent residency must make an investment of at least $360,000 divided as follows:- $350,000 investment in an approved reforestation project.
- $10,000 for maintenance, and management
- Regular Process:
Applicants who seek to obtain permanent residency in Panama through the regular reforestation visa program must invest $100,000, utilized as follows:- $90,000 for the land. The area depends on the project of your choice.
- $10,000 for maintenance, and management for a period of up to 8 years.
Dependents can be covered under the program, including the applicant’s spouse and any children under 18. Children between the ages of 18 and 25 who are unmarried students with no children of their own may also qualify as dependents of the applicant.
B. Steps for Obtaining the Panama Golden Visa
- Submission of Application
Applicants are required to complete the necessary application forms and submit them along with the applicable fees and supporting documentation. These documents should include details concerning the origin of investment funds and the general personal information of the investor. The specific documents needed may vary based on the chosen investment option, encompassing certificates from entities such as the Panama Public Registry, National Authority of Land Ownership, and Securities House, among others.
- Due Diligence Checks
Before applying, a preliminary round of due diligence checks is carried out. Subsequent checks are conducted after the initial review to verify the accuracy of the information provided in the application.
- Time Required for Processing
The processing time for residence applications varies depending on the selected route. For the Qualified Investor route, the processing period typically spans 30 days. In contrast, both the Friendly Nations and Forestry Investor routes have longer processing times, ranging from four to six months. The processing time indicates the duration from the submission of the application to its approval for each specific route.
- Permanent Residence Permits
Panama grants residency permits promptly for applicants following the Qualified Investor and Forestry Investor routes. However, for those choosing the Friendly Nations route, a temporary residence period of two years must be completed before obtaining permanent residence status. The immediate issuance of permits is contingent upon the successful completion of due diligence checks and adherence to the specified requirements, with all applications subject to review by the National Immigration Service.
The Process of Buying Property in Panama as a Foreigner
When acquiring real estate in Panama as a foreigner, it’s vital to grasp the dynamics of the local real estate market, the legal procedures involved, and the various property options available. Below is a comprehensive overview to navigate you through the process:
- Property Selection with the Guidance of a Real Estate Expert
Initiate the process by selecting a property with the assistance of a well-informed real estate agent who can offer detailed insights into each property listing. The buyer must determine whether they are purchasing “Titled” or “Rights of Possession” (ROP) property. The agent also plays a pivotal role in negotiating terms and preparing you for the purchasing process.
- Legal Support for Title Verification and Documentation
Engage a qualified Panamanian attorney to conduct a thorough title search and compile all the necessary legal documents. The attorney will draft a purchase agreement to formalize the terms of the sale and handle the deposit transaction if it is required.
- Financial Planning and Escrow Arrangements
Explore your financing options and ensure that the necessary funds are prepared and placed in an escrow account for the impending transaction. As per the most recent INEC data, the average property cost in Panama City stands at approximately $2,480 per square meter.
- Finalizing the Transaction
Once the attorney verifies that the property title is clear, a closing date is scheduled for the signing of the final purchase contract. Payments for the property, legal fees, and brokerage commissions are processed from the escrow account. Please note that payment to the seller may occur after the property has been officially registered under the buyer’s name.
Benefits of Obtaining Residency in Panama
Securing residency in Panama presents numerous substantial advantages, particularly for expatriates and foreign individuals contemplating real estate investments in the country. Here are some of the benefits of obtaining residency in Panama:
- Financial and Banking Benefits
Acquiring residency status immediately streamlines the process of opening a bank account in Panama. Many local banks, especially those catering to Americans, either prefer or mandate residency for account initiation. This streamlined access to banking services proves invaluable for managing financial transactions and investments within Panama.
- Tax Advantages
Panama operates under a territorial tax system, exempting income earned outside its borders from taxation. This tax structure proves particularly beneficial for foreign investors, digital nomads, and individuals earning their income abroad. Essentially, if your income originates outside Panamanian territory, you will not be subject to income taxation in Panama.
- Convenient Residency Maintenance
Residing in Panama does not require a specific number of days in-country to sustain your residency status. You can make Panama your base for worldwide travel, returning for short periods every two years to uphold your residency status without any complications.
- Lifestyle Benefits
Panama boasts a reputation for being hospitable to expatriates, offering a tropical climate, stunning beaches, a safe environment, and cost-effective standard of living. Panama provides modern amenities, a rich cultural scene, and diverse natural landscapes. All of these factors make Panama an enticing choice for those seeking a superior quality of life in a tropical paradise.
- Pathway to Citizenship
After residing in Panama for five years through one of the available residency programs, you become eligible to apply for citizenship. This entails passing a citizenship examination, demonstrating proficiency in Spanish, and maintaining a clean criminal record throughout your residency period. Panama allows dual citizenship, permitting you to retain your original citizenship while enjoying the privileges of Panamanian citizenship, including voting rights and visa-free travel to numerous countries.
Funding and Legal Aspects
Panamanian financial institutions present diverse lending options to foreign individuals interested in real estate investments. These options include traditional fixed-rate mortgages, where the interest rates are subject to factors like the property type, the applicant’s age, and their visa status. The loan-to-value (LTV) ratio and the borrower’s financial capacity play pivotal roles in determining eligibility. Typically, interest rates for residential properties are around 6.5%, with slightly reduced rates of 5.5% for full-time residents as of January 2024. Notably, non-residents can access the same interest rates if their applications are approved, and these rates are not credit score-driven. Mortgage durations in Panama typically span from 10 to 25 years, with foreigners generally required to make a down payment of about 30%, while Panamanians may need to provide 20%.
At present, the banking institutions providing financing options for foreigners include Scotiabank, Banistmo, Multi-Bank, and Banesco. In addition to bank-based financing, seller financing represents an alternative, where the property seller agrees to provide financial support for the purchase. This can be advantageous for borrowers facing challenges in qualifying for a bank mortgage. Developer financing is also common, particularly in pre-construction and during-construction developments, often entailing smaller initial down payments and a final balloon payment upon property completion. Collaborating with local experts is essential to navigate the intricate mortgage procedures in Panama. A qualified mortgage broker or legal advisor can assist you in collecting necessary documentation, submitting applications, and guiding you through property appraisal and the signing of the mortgage agreement.
Conclusion
In conclusion, Panama offers a world of possibilities for those seeking residency through real estate investment. We’ve explored the various visa options, revealing how you can make your dream of living in this enchanting country a reality. From the incredible benefits of Panama residency to the essential funding and legal aspects, we’ve provided a comprehensive guide to help you navigate the process. So, whether you’re captivated by the vibrant culture of Panama City or the tranquil beauty of beachside towns, the doors are open, and your adventure awaits. Don’t miss out on the opportunity to call Panama your home – start your journey today!
