Obtain a non-encumbrance certificate at the Public Registry Office
Agency: Public Registry (“Registro Público de Panamá”)
Parties obtain a non-encumbrance certificate before starting the transaction to verify if the property has any liens (e.g. mortgages, litigation). This certificate is obtained at the Public Registry of Panamá. In many cases, it is advisable for property sales, that a surveyor is engaged to verify the correct measurements and location of the properties.
Time and cost: 2 days, USD 30
Obtain a certificate of good standing online from the Autoridad Nacional de Ingresos Públicos
Agency: Tax Agency (“Dirección General Impositiva” – DGI)
The seller must obtain a Real Estate Tax Clearance Certificate. In order to obtain this document, the property shall be registered at the Online System of the Directorate General of Revenues (DGI). This certificate can be obtained online since 2009, and the printout must be submitted to the Public Registry. Once submitted, the Public Registry will verify it again online. This certificate can be requested by the individual or entity which has a password to enter the DGI Online System and must have the plot number and the page number (document number) issued by the Public Registry. Note that a land with a value under USD 30,000.00 is exempt of the Real Estate Property Tax. Owners pay this tax according to a progressive scale that ranges from 1.75% on the excess over USD 30,000.00 to 2.10%on the excess over USD 75,000 annually based on the cadastral value of the property.
Time and cost: Less than 1 day (online), free of charge (online)
Obtain a non-debt water certificate (“certificado de Paz y Salvo”)
Agency: Instituto de Acueductos y Alcantarillados Nacionales (I.D.A.A.N.)
According to Law 77 of December 28, 2001, it is necessary to submit to the Public Registry a certificate stating that no water bills are owed in order to register the sale and purchase deed. The “certificado de Paz y Salvo” from IDAAN will be issued in 24 hours.
Time and cost: 1 day, USD 1.25
A lawyer prepares the sale agreement
Agency: Lawyer’s office
A lawyer usually prepares the sale agreement (it can also be prepared by a real estate broker or a bank). In any case, the sale agreement -called the Minuta- needs to be stamped by a Panamanian lawyer prior to being executed in a public deed. The sale agreement should mention that there are no mortgages or limitations on the property. The documentation shall include: (i) Non-encumbrance certificate (obtained in Procedure 1).
Time and cost: 2 days, USD 200
Payment of the Transfer and Capital Gains Taxes
Agency: Autoridad Nacional de Ingresos Públicos (ANIP)
Prior to filing and recording the public deed at the Public Registry, the Property Transfer Tax should be paid (if it is not in one of the cases exempted by law) at the Ministry of Economics and Finance, by the seller. The transfer tax rate is 2% of the price of the transaction or the cadastral value, whichever is higher. There is no VAT in Panama for transfers of property (Law No.49 of 17th September 2009, which amends the Fiscal Code and adopts other fiscal measure, sets forth the obligation for sellers to pay a sum equivalent to 3% of the total value of the sale or of the cadastral value of the property, whichever is higher, as an advance payment of the Income Tax applicable to any profit resulting from the sale operation. In such cases, the taxpayer may opt to consider such 3% as the definitive Income Tax to be paid for profits earned. However, where such 3% advance payment exceeds the amount resulting from application of the nominal rate of such tax, which is 10% of the difference between the real value of the sale and the sum of the cost to acquire the property plus the expenses required to carry out the operation, the seller taxpayer may ask the General Income Directorate for reimbursement of the sums paid in excess, whether in cash or by means of a fiscal credit that can be used to pay other taxes). Previously and since July 2006, the 10% of capital gains tax was calculated and paid at the moment of the sale as well as mentioned in the sale act by the notary; the gain was calculated as sales minus buying cost, minus expenses (lawyers, notary fees).
Time and cost: 2 days, USD 14,355.94 (2% of property value (transfer tax) + 3% of property value (capital gains tax – not included in the cost calculation per methodology))
Notarization of the sale agreement and preparation of the public deed
Agency: Notary
The notary notarizes the sale agreement. All transfers of property must be notarized before submitting them to the Public Registry for registration.
The documentation shall include:
- Sale agreement (prepared in Procedure 4);
- Receipt of payment of the property transfer tax (obtained in Procedure 5);
- Certificate of good standing with the Real Estate tax (obtained in Procedure 2);
- Good standing certificate with water utility services (obtained in Procedure 3).
Time and cost: 2 days, USD 100
The public deed is filed and recorded at the Public Registry Office under the name of the buyer
Agency: Public Registry (“Registro Público de Panamá”)
The public deed is filed and recorded at the Public Registry under the name of the buyer. The registration fee is paid at the National Bank in favor of the Public Registry Office. The bank has a branch inside the registry office. Since 1999, there has been an optional expedited procedure in which one can obtain registration within 24 hours, at an additional cost of $250 though not many people choose it because it is rather expensive.
The documentation shall include: the notarized public deed (obtained in Procedure 6).
In May, 2013 an automated system between the Cadastre and the Land Registry was implemented. The system is responsible to share the information involving the registration with the cadastre once the application is filled. The cadastre then records the new buyer for tax purposes as the new person responsible for the payment of the property tax.
The Public Registry is implementing an online system which would allow lawyers to submit all the documents required to register the transfer of an immovable property.
Time and cost: 14 days, USD 2,168.39 (0.3% of property price (registration fee) + USD 5 for filing + USD 10 for analyzing the document)
