Panama for US citizens

Climate:

Panama is tropical, with a hot and humid climate typical of Central American countries. The country has a rainy season from May to December and a dry season from January to April.

Religion:

The majority of Panamanians identify as Roman Catholic, making up about 85% of the population. Protestant denominations make up most of the remaining percentage, with small groups of Jewish, Muslim, and Hindu communities.

Demographic:

• Ethnic Groups: The population is a mix of Mestizo (a blend of Amerindian and white), Amerindian and mixed (West Indian), white, and Amerindian.
• Language: The official language is Spanish, but many Panamanians speak English, especially in business settings and tourist areas. Some indigenous communities speak their native languages.
• Population: Panama has a population of around 4 million people.

Political System:

Panama is a constitutional democracy. The President of Panama is both the head of state and the head of government. The country has a multi-party system. The Legislative Assembly (Asamblea Nacional) is a unicameral body with 71 members who are elected for five-year terms.

Medium Income:

The gross national income per capita is around $14,000 to $15,000, but this can vary widely among different regions and populations.

Weather:

Panama’s weather aligns with its tropical climate. Temperatures in Panama City, for instance, typically range from the mid-70s to the high-80s Fahrenheit (24°C to 31°C) year-round. While the Pacific side (where Panama City is located) has a clearer distinction between the wet and dry seasons, the Caribbean side (like Bocas del Toro) tends to have more consistent rainfall throughout the year.

Landscape:

Panama boasts a diverse landscape:

• Coastlines: Panama has both Pacific and Caribbean coastlines, known for their beautiful beaches.
• Mountains: The country has mountain ranges, including the Cordillera de Talamanca near the Costa Rican border.
• Rainforests: Rich rainforests, such as the Darién Gap, are biodiverse and critical to the region’s ecology.
• Canal: The Panama Canal, a significant engineering marvel, connects the Atlantic and Pacific Oceans.
• Islands: Panama has several islands and archipelagos, including the San Blas Islands and the Pearl Islands.

Panama’s landscape, combined with its unique position as a land bridge connecting North and South America, results in a rich biodiversity with many species of plants, birds, mammals, and reptiles.

The cost of living in Panama can vary widely depending on the location and the lifestyle one wishes to maintain. Panama City, as the capital and main business hub, tends to be the most expensive, while rural areas and smaller towns are considerably cheaper.

Here’s a general breakdown of living expenses in Panama:

Housing:

• Panama City: Rent for a modern one-bedroom apartment in a desirable area of Panama City might range from $1,000 to $1,500 per month or more. If you’re looking outside the main areas, rents can drop to $700-$900 for similar apartments.
• Elsewhere: In smaller towns or more rural areas, you might find decent accommodations for $400-$700 per month.

Utilities:

• Electricity, Water, and Gas: For a typical apartment, utilities can range from $50 to $150 per month, depending on usage and location. Air conditioning, prevalent in the hotter regions, can significantly increase electricity bills.

Food:

• Groceries: A couple might spend between $300 to $450 per month on groceries, depending on dietary habits and where they shop.
• Dining Out: A meal at a local restaurant might cost $5-$10, while a three-course meal at a mid-range restaurant could be $20-$40 per person.

Transportation:

• Public Transport: Buses are quite affordable, often less than $1 for local routes.
• Taxis/Ubers: Rates are reasonable but can vary. A typical ride within Panama City might cost between $3 to $10.
• Car: If you buy a car, consider costs like fuel (around $0.70 to $1.00 per liter as of 2021), maintenance, insurance, and parking.

Healthcare:

• Medical care in Panama is generally affordable compared to countries like the U.S. A doctor’s visit might cost $50 without insurance. Many expatriates choose to buy private health insurance, which can range from $60 to $200 per month, depending on coverage, age, and health.

Entertainment and Miscellaneous:

• Entertainment, including movies, outings, and other leisure activities, can vary in cost but are generally more affordable than in many Western countries. A movie ticket, for instance, might cost around $6.
• Internet and mobile phone packages can vary, but expect to spend around $20-$60 per month for good connectivity.

Other Costs: If you’re considering living in a gated community or upscale neighborhood, factor in costs like homeowner’s association fees, security, and other amenities.

Overall, it’s entirely possible for a couple to live comfortably in Panama on $1,500 to $2,500 per month, depending on the region and lifestyle. However, if one chooses a more luxurious lifestyle in a prime location in Panama City, costs can be much higher. Always consider visiting and staying for an extended period to get a real sense of costs tailored to your lifestyle.

Traveling to Panama as a U.S. citizen usually involves a straightforward process, but it’s always a good idea to double-check with the U.S. State Department or the Panamanian Consulate for the most up-to-date information. Here are the general requirements for U.S. citizens traveling to Panama:

Passport: You’ll need a valid passport with at least six months of validity beyond your date of entry into Panama.

Tourist Card or Visa: U.S. citizens typically do not need a visa for stays of up to 180 days for tourism purposes. Instead, they might be provided with a stamped tourist card upon arrival (often included with the airfare).

Return or Onward Ticket: You may be asked to provide proof of an onward or return ticket when entering the country.

Proof of Sufficient Funds: While this is not always enforced, officials might request evidence that you have enough money to support your stay in Panama. This can be in the form of bank statements, cash, or credit cards.

Vaccination: Yellow fever vaccination is not required for all travelers. However, if you’re coming from a country with risk of yellow fever, you might be asked for proof of vaccination.

COVID-19 Specific Requirements: The pandemic introduced various travel restrictions and requirements worldwide. As of my last update, travelers to Panama may need to present a negative COVID-19 test result taken within a specific timeframe before arrival. Alternatively, travelers might be tested upon arrival and might be subject to quarantine regulations depending on the result. These regulations have been changing as the global situation evolves, so always check for the most recent requirements.

Overstay Penalties: If you stay beyond the 180-day allowance without the appropriate visa extension, you could face fines and potential deportation.

Driving: If you plan to drive in Panama, you can use a U.S. driver’s license for up to 90 days. After that, you’d typically need to obtain a Panamanian license or an international driving permit.

Insurance: While not a requirement, it’s a good idea to have travel insurance that covers health, trip interruptions, and other unforeseen events.

Lastly, note that entry requirements can change, so before any trip to Panama, ensure you consult the Panamanian embassy or consulate, or relevant official websites, for the most current information.

Buying property in Panama as a U.S. citizen is a relatively straightforward process, and many foreigners, including Americans, have taken advantage of the country’s favorable property laws. However, as with any real estate transaction abroad, it’s essential to be aware of the rules, potential pitfalls, and best practices. Here are some key points to consider:

Foreign Ownership Rights: Foreigners have the same property rights as Panamanians, with some minor exceptions. For example, foreigners cannot own property within 10 kilometers of the border.

Property Types:

• R.O.P. (Rights of Possession): This is more of a “right to use” land and is common in some beachfront and rural areas. It’s not titled property, and the government retains ultimate ownership, but it can be developed and sold. There’s more risk associated with R.O.P. land, so due diligence is crucial.
• Titled Property: This is the most common and secure way to buy real estate. A title deed (or “escritura”) is recorded in the Public Registry.

Due Diligence:

• Hire a reputable local attorney who is experienced in real estate transactions. They can ensure that the title is clean (free of liens or encumbrances) and that the property can be legally transferred.
• Verify zoning regulations, especially if you plan to develop or make significant changes to the property.
• Consider a property survey to confirm boundaries.

Financing: While some Panamanian banks offer mortgages to foreigners, the terms can be less favorable than those in the U.S. It’s also common for property transactions in Panama to be cash purchases.

Transaction Process:

• Once you agree on a price, a Promise to Buy-Sell Agreement is typically drawn up and signed by both parties. A deposit (often 10%) is usually paid at this time.
• The final sales agreement or Purchase and Sale Agreement is then signed before a public notary.
• Payment is made, and the property is transferred to the buyer. The deed is then registered in the Public Registry.

Taxes and Fees:

• Transfer tax is usually around 2% of the updated registered value of the property or the sale price, whichever is higher.
• Properties with a registered value of $30,000 or below are exempt from property tax. Above this threshold, property tax rates range based on the property’s value.
• There are also notary fees, registration fees, and other costs. Your attorney can provide a detailed breakdown.

Tax Incentives: Panama has offered various tax incentives for property owners, especially for new constructions. For example, new residential properties might receive property tax exemptions for up to 20 years, depending on the property’s value.

Fideicomiso (Trust): Some buyers choose to hold property in a Panamanian trust or corporation for privacy, liability protection, or estate planning purposes.

Property Management: If you’re not planning to reside in Panama full-time, consider hiring a property management company to take care of your property, especially if you’re planning to rent it out.

Caveats: As in any country, there are potential pitfalls in buying property. There might be issues with land rights, especially in indigenous areas or regions where land hasn’t been formally titled.

In conclusion, while Panama offers attractive opportunities for property investors and retirees, it’s essential to conduct thorough due diligence, understand the local market, and seek expert advice.

Panama offers several residency programs that have been attractive to foreigners, especially those from the United States, Europe, and other countries. While Panama doesn’t have a “Golden Visa” program in the same way that some European countries do (whereby significant investment in real estate or a donation provides immediate residency), it does have residency pathways that are tied to economic contributions or investments. Here are the main ones:

Friendly Nations Visa: This is one of the most popular programs. Citizens from over 50 countries that have “friendly” relations with Panama, including the United States, Canada, and most of the European countries, can apply for this visa. The requirements include:

• Establishing an economic or professional tie to the country. This could be through starting a business, getting a job in Panama, or buying real estate.
• Depositing a minimum of $5,000 (plus $2,000 for each dependent) in a Panamanian bank account. After meeting the criteria, applicants can receive permanent residency and, after five years, can apply for full citizenship.

Reforestation Investment Visa: This visa is for those who invest at least $80,000 in a reforestation project approved by the Panamanian government. After maintaining the investment for a certain number of years, applicants can apply for permanent residency.

Pensionado (Retiree) Visa: This is not tied to an investment, but to proof of a steady income. Applicants need to prove they receive a pension of at least $1,000 per month for life. There are various benefits tied to this visa, such as discounts on entertainment, dining, medical services, and more.

Economic Solvency Visa: This visa category involves three options:

• Deposit $300,000 into a Panamanian bank for a minimum of three years.
• Purchase real estate in Panama worth $300,000 or more.
• A combination of the above, where the total equals $300,000. This visa initially provides a two-year temporary residency, after which holders can apply for permanent residency.

Business Investor Visa: By investing $160,000 or more in a Panamanian company and becoming its director, you can qualify for this visa. It initially offers a one-year temporary residency, and after that, holders can apply for permanent residency.

Citizenship: After five years of permanent residency (under most of the mentioned visas), individuals can apply for full Panamanian citizenship and a passport. This process involves demonstrating ties to the country, some knowledge of the Spanish language, and passing a basic test about Panama’s history and governance.

When considering any of these programs, it’s imperative to consult with a reputable Panamanian attorney to ensure that you meet all requirements and that the application process goes smoothly. As immigration rules can change, always check for the most current requirements and processes.

Mortgaging or financing property in Panama as a U.S. citizen is possible, but there are distinct differences and considerations compared to securing financing in the U.S. Here’s a general outline of what you might expect:

Local Banks: Most banks in Panama will lend to foreigners, including U.S. citizens. However, they typically have stricter requirements for non-residents than for residents.

Down Payment: Expect to pay a more substantial down payment when purchasing property in Panama as a foreigner, sometimes as much as 30-40%.

Interest Rates: As of my last update in September 2021, interest rates in Panama were relatively competitive. However, rates can fluctuate based on the Panamanian economy and other factors.

Documentation: Be prepared to provide a significant amount of documentation, including:

• Proof of income or employment.
• Bank statements (sometimes up to six months or a year).
• Personal references.
• A local credit report. If you don’t have any credit history in Panama, some banks might ask for a credit report from your home country.
• Legal property documents, such as the property title or a purchase agreement.

Term of Loan: Mortgage terms can vary. It’s common to find terms of 10, 15, or 20 years, but it’s rarer to find 30-year mortgages like in the U.S.

Legal Assistance: It’s a good idea to have a local attorney who is familiar with real estate transactions in Panama. They can help ensure you understand the fine print and that all property titles and transactions are handled legally and efficiently.

Foreign Lenders: Some international or U.S.-based banks operate in Panama and might offer mortgages to U.S. citizens buying property there. Terms and conditions might differ from local banks.

Alternative Financing: Seller financing is another option where the property owner provides the financing to the buyer directly. Terms and conditions will vary based on the agreement between the seller and the buyer. This can sometimes be a simpler process than going through a bank, but it’s crucial to have a well-drafted agreement in place.

Property Taxes and Fees: Ensure you are clear about the property taxes, maintenance fees, and other costs associated with the property. Some newer properties in Panama have been granted tax exemptions which can last for several years, but this will depend on the property and its location.

Insurance: Banks will usually require you to have property insurance if you’re taking out a mortgage.

Residency: While it’s not required for buying property or obtaining a mortgage, Panama offers various residency programs that can be beneficial if you plan to spend significant time in the country.

Here’s some general information about rental income potential in Panama. However, please note that economic and real estate conditions may have changed since then, so it’s always a good idea to consult up-to-date sources or experts for the most current information.

Panama has been an attractive destination for real estate investment and retirement due to its favorable climate, modern infrastructure, and relatively low cost of living. The country’s capital city, Panama City, and other popular areas like beach towns and mountain communities have been of particular interest to investors.

Factors influencing rental income potential in Panama include:

Location: Properties located in popular tourist destinations, urban centers, or expat communities tend to have higher rental income potential.

Property Type: The type of property you invest in, such as apartments, condos, houses, or vacation rentals, will impact rental income. Vacation rentals and properties in high-demand areas may yield higher returns.

Tourism: Panama’s tourism industry can significantly influence rental income potential. Properties in areas with a strong tourism presence and attractions tend to attract more renters, especially during peak tourist seasons.

Rental Demand: Consider the local demand for rental properties. If there’s a shortage of rental units in a particular area, you may have better luck finding tenants and commanding higher rental rates.

Rental Regulations: It’s important to understand the legal and tax regulations related to property rentals in Panama. Familiarize yourself with landlord-tenant laws and any required permits or licenses.

Economic Conditions: The overall economic stability and growth of Panama can impact the rental market. A strong economy generally leads to higher demand for rental properties.

Property Management: If you’re not planning to manage the property yourself, hiring a reputable property management company can help ensure a steady stream of rental income and proper maintenance of the property.

Competition: Assess the level of competition in the rental market. If there are many similar properties available for rent in the same area, you might need to adjust your rental rates accordingly.

Market Trends: Stay updated on the latest real estate market trends in Panama to make informed decisions about your investment strategy.