Living, renting and buying in Panama: first the finca number, then the rest

First the order that's fixed on this site: in your first year you don't buy. With Panama that's not a formality but the core of the advice, because this is a market in which two things that are both called "property" have legally nothing to do with each other. This article explains that difference, and then deals with renting, the bank and the money.

Buying is allowed — with two limits

Panama has no general ban on ownership by foreigners. You may buy, own, let and sell titled property in your own name, with the same rights as a Panamanian, and you don't need a residence permit for it.

Two hard exceptions. The first is in the constitution: foreign persons and companies with foreign capital may not acquire land within ten kilometres of the national border. That affects parts of Chiriquí and Bocas del Toro near the border with Costa Rica, and Darién near Colombia. There is no exemption and no corporate structure that works around it — it's constitutional.

The second isn't a ban but a strip: along the coast lies a public easement of 22 metres from the high-water line. That strip is public domain, even with a titled beach plot. Whoever buys a house "on the beach" doesn't buy the beach.

The pitfall it all revolves around here: title or possession

This is the most important thing you can know about Panamanian property.

Título de propiedad is real ownership: registered in the Registro Público under a unique finca number, transferable, insurable, financeable with a mortgage, and with evidential force against third parties. This is what a Dutch person understands by ownership.

Derecho posesorio is not that. The state legally remains the owner; what is sold is a recognised possession. The characteristics:

• no finca number and no registration in the Registro Público;
• cannot be financed with a mortgage — Panamanian banks don't accept it as collateral, which limits your buyers' market on resale to cash buyers and depresses the value;
• the boundaries are often not cadastrally surveyed, and overlapping claims occur.

And the sting: possessory right is precisely widespread in the areas where foreigners want to live — coastal land, beaches and islands.

The quickest test there is: no finca number, no title. Ask about it first, before the viewing and before the conversation about the price.

There is a legal route from possession to title: a law from 2009 recognises peaceful and uninterrupted possession of more than five years on national land in coastal zones and island territory, and regulates the conversion via the land authority ANATI. But such a process can take years, costs money, and the outcome isn't certain. Whoever buys a plot "because the title is coming" buys a litigation risk and not a house. The advice for a retiree with finite capital is therefore undiluted: buy only titled property with a finca number.

The buying process, and the lawyer who is yours

The sequence is: due diligence, then a promesa de compraventa (binding preliminary contract, deposit usually 5 to 10 percent, via escrow and not directly to the seller), then the escritura pública at the notary, and then registration in the Registro Público. That last step makes you the owner — not the deed. Count on thirty to sixty days with a cash purchase, sixty to ninety with a mortgage.

Due diligence includes: the finca number and the registration, mortgages and attachments, whether the property tax and the owners'-association contributions have been paid, whether the plot falls outside the ten-kilometre zone, the cadastral boundaries, and with a beach plot those 22 metres.

Take your own lawyer, not the seller's. In Panama an estate agent has no legal duty of care towards the buyer, and dual agency — the same agent for buyer and seller — is customary there. Only your own lawyer does have that duty. The lawyer "supplied" by the seller or the developer is precisely the construction that foreign buyers fall for most often.

What it costs. As a buyer you count on 2.5 to 4.5 percent on top of the purchase price with a cash purchase: lawyer (1 to 1.5%), notary and registration (0.5 to 1.5%), title search and valuation. The transfer tax of 2 percent and the 3 percent advance levy on the capital gain formally fall on the seller — but that's sometimes pushed across in negotiations, so have it laid down in the promesa who pays what.

The new-build myth that estate agents still sell

You'll hear that new-build in Panama is exempt from property tax for twenty years. That's no longer correct. The law of 2017 abolished that exemption for the future; only projects with a building permit from before 1 January 2019 keep their running exemption until the end date.

So with new-build in 2026 assume there is no exemption, unless the file shows a building permit from before 2019. Have your lawyer request that date and include it in the promesa.

What does exist: a three-year exemption for a first home with a cadastral value between B/.120,000 and B/.300,000 that you have registered immediately as your main residence. And as a pensionado the freezing of the property tax on your own home comes on top of that, provided it's in your own name and is your only property — see the pensionado discounts.

Renting: what it costs, per region

Everything in dollars, because the balboa is pegged to it one to one.

In Panama City a one-bedroom flat averages around $1,150 and a two-bedroom around $1,550 to $1,650. The differences per district are large: the premium segment on the waterfront — Punta Pacífica, Costa del Este, Avenida Balboa — asks $1,800 to $3,500, while the central and lively El Cangrejo or San Francisco sits at $850 to $1,700. Families often look at the green Clayton or Albrook, and pay $1,600 to $3,800.

In Boquete, the highlands of Chiriquí at some 1,200 metres, a simple one-bedroom flat starts around $500 to $800 — and you trade the air conditioning for a climate that's mild all year round. That saves not only rent but also electricity, because in the lowlands air conditioning is the biggest variable item on your bill.

Two things to factor in: furnished costs $150 to $400 a month extra, and the service charges of $150 to $450 are usually paid by the landlord — but electricity, internet and gas aren't. Ask per home who pays what, and ask for an electricity bill from the dry season.

The bank: this is a question of order

Opening a Panamanian bank account is notoriously difficult for non-residents. Banks apply strict compliance, admission is discretionary, refusals aren't explained, and many applications founder on incomplete papers.

What you need: your passport and a second proof of identity, two bank reference letters from your current bank — the classic stumbling block, because Dutch banks don't issue those as standard and they're only valid for about thirty days — proof of income (a pension statement works well here), proof of address no more than ninety days old, apostilles for a remote application, and Spanish translations. Count on a minimum deposit of $1,000 to $5,000 and on a personal interview.

Residency changes everything. Residents have more choice, a higher success rate and a faster process. So the order in this journey isn't a coincidence: first the pensionado visa, then your cédula, and only then the bank. Whoever reverses it burns months and a trip. Have your immigration lawyer make the introduction.

The money: no exchange risk in Panama, but there is on your income

This is the financial asymmetry of this corridor, and it's rarely named. Panama uses the US dollar as legal tender. Within Panama you therefore have no exchange-rate risk at all: your rent, your groceries and your healthcare are all in dollars.

But your income isn't. The SVB pays your AOW (the Dutch state pension) to a foreign account too, but Panama is not on the list of countries where payment is made in local currency. So your AOW arrives in euros on a dollar account, and the receiving bank charges the conversion at its own rate and margin.

That means: a euro that weakens ten percent is ten percent loss of purchasing power. So work out your monthly budget with an unfavourable rate, not with today's rate. Practically, two things help: keep part of your capital in dollars, and bundle your transfers instead of transferring monthly — every transfer costs fixed charges plus margin.

Beyond that, the ordinary work outside the eurozone: the SVB charges at most € 0.48 per foreign payment, you need the SWIFT code and your bank's details because an account number outside SEPA isn't enough, and you send back a life certificate every year. For the tax side you read AOW, pension and tax in Panama.

In Vertrekklaar this is phase 5 of 5 of the journey: the same steps, but for your situation — in your order, tickable, and with the deadlines watched. See the whole journey to Panama.