Tips on owning Panama real estate

This post is also available in: Spanish

By: Staff at Panama Offshore Legal Services
E-Mail: info@pols.com.pa || Phone: (507) 227 – 6645

Daniel and Alice are an American married couple who have relocated to Panama. They want to purchase a condominium apartment in Panama City, but have questions regarding the best way to own it.

There are three ways to own real estate in Panama: Individually, with a Panama Corporation, or a Panama Private Interest Foundation.

As individuals, Dan and Alice can have their names on the title deed as joint owners as many married couples do. However, owning assets in your own name carries potential risks. One risk is liability for personal injuries. A car accident caused by one of them can result in serious injuries or death resulting in a large lawsuit judgment. That would leave the apartment exposed to court seizure to pay off the judgment. When Dan and Alice pass away, another potential problem is that the Panama Probate laws could create unexpected costs and delays before title to the apartment transfers to the heirs. Lawyers charge up to 25% of the estate in a succession process.

If a Panama Corporation owns the real estate, when Dan and Alice pass away, their shares in the corporation transfer to their heirs, as the title will remain in the corporation’s name. If either Dan or Alice is sued for personal injuries, the apartment is protected from court seizure, as it is owned by the corporation and not by Dan and Alice personally. If Dan and Alice decide to sell the apartment, they have the option of selling and transferring the property title, or they could sell and transfer the shares of the corporation that holds the property title, which could provide certain property tax benefits to the buyer, making the property more attractive in the market place.

A Panama Private Interest Foundation is a unique legal entity mainly used for asset protection, estate planning, and probate avoidance purposes. By placing the real estate into the Foundation, the asset is fully protected against potential lawsuits, because under Panamanian laws, assets held in Private Interest Foundations are untouchable in the case of a legal attack. Moreover, when Dan and Alice pass away, the foundation still owns the apartment and their heirs, as beneficiaries, can take control of the foundation, free of inheritance taxes and avoiding a costly and lengthy succession process through the Panamanian court system.

As you can see, there are several considerations to discuss with a Panama law firm before deciding which way to own Panama real estate.

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