As you probably know, Panama is a beautiful country; full of history, beautiful scenery, wildlife and incredible natural resources, Panama is a sight to behold. What you may not know is that Panama is a great location to own property as well. Panama property is exceptionally priced and Panama's laws and taxes are beneficial to landowners.

Panama property taxes

The property taxes in Panama are based on a sliding scale with lower-cost properties paying less and more expensive properties shouldering a heavier burden. Panama Properties that have a registered value of $30,000 or less don't pay property tax. Panama Properties are taxed 1.75% between $30,000 and $50,000; a tax of 1.95% is levied for property values between $50,000 and $75,000; and 2.1% is charged for any property value above $75,000.

For construction permits issued after Sept. 1, 2006 these exemptions apply:

o Value up to $100,000: 15-year exemption

o Value from $100,000 to $250,000: 10-year exemption

o Value over $250,000: five-year exemption

Basic Real Estate Laws and How They Affect Buyers

Once you've located the real estate you want, the first step in purchasing Panama property is a down payment. This money signifies a buyer's intent to purchase the property and is typically 10% of the sale price. Panamanian law uses the down payment as enforcement of the agreement between the buyer and seller. If the buyer reneges on the deal he loses his down payment; if the seller reneges, the buyer is entitled to double the down payment for damages. This feature discourages a seller from attempting to find and take a better offer after agreeing to a deal.

The Promise to Purchase agreement is critical to the entire process. This contract includes the legal description of both the transaction being executed and the parties involved. All necessary information is included in this document including the property description, the terms of the deal and the legal identification of both the buyer and seller. This document is later conveyed to the escrow company and both the information for the title the names for the disbursements are taken from its pages.

Types of properties

Panama property is broken down into two different types: titled land and "right to possess". Understanding these two types of property are critical to understanding exactly what you are buying.

Titled land

Titled land is the term for all properties that are recorded in the Public Registry. A formal history of ownership is available and any liens or other claims against the property are included. Like properties in the US, Panama property that is titled cannot be sold without a clear title, making the title search an important step in the process. It is wise to note that you can purchase title insurance and it is as strongly suggested for real estate in Panama as it is for real estate in the United States.

"Right to possess" property was established by the Panamanian government in 1971 to encourage inhabitation of unclaimed, untitled land. While "squatter's rights" haven't been used in the US for quite some time, it is still valid in Panama. For "right to possess" Panama property, it is very important to have a good attorney as legal issues could arise if proper procedures have not been followed by the previous owners. While this is concept is somewhat strange to Americans, don't be scared away if the property you want is 'right to possess". It is important that you and your attorney follow proper procedure and you can still securely get a great deal on your new real estate.

Conclusion

You can purchase Panama property with the knowledge that it is a procedure with only a few differences when compared to buying in the US. If you make sure you have a good attorney and both of you monitor the process carefully, you shouldn't experience any major problems. With the great deal that you get on your Panama property and the relative ease of the process, you will likely view the process as a rewarding experience.