Real Estate Panama, Investment opportunities

Posted by: panama expertos on 09.04.2007

Panama has one of the lowest costs of living in all central and south america. Colombia is cheaper if you don’t mind being an occasional kidnap/robbery victim. Actually many legitimate colombians have moved to panama and are setting up businesses here. Honduras is cheaper but there is no infrastructure for medical, phones, internet etc. Ecuador has little infrastructure but it sure is cheap. Belize isn’t so cheap and has little infrastructure. Costa rica is not really cheaper and has a serious crime problem plus there are no longer benefits for expats and you would have to pay income tax on your offshore income like retirement, social security etc in costa rica. Mexico has a serious crime problem with drug gangs executing mayors and police chiefs their first day in office and kidnappings are common. It is debatable if mexico is cheaper than panama but they do tax offshore income in mexico so it is probably more expensive for this reason alone and the crime situation makes it hazardous. I am sure you could find some safe areas in rural mexico but then you have no infrastructure like internet, phones, cell phones, good highways, medical, good water, etc. So that brings us back to panama which is the only country that seems to have it all - no taxes on offshore income, extremely low crime (lowest crime rate in latin america), great food (not good, great), very good internet at usa prices, good phones, good cell phones, cable and satellite tv, friendly people, the ability to buy just about anything you can buy in the usa probably for the same price or less, many consumer goods at a fraction of the usa prices, nice climate, 2.5 hours by plane to miami and so forth.

Panama city
Panama economy

Panama has its own currency, the balboa. It is a coin system similar to the uss quarters, dimes, nickels, and pennies. However, the panamanian economy is based on the us dollar. In the market place the balboa is intermixed with the us currency that is predominately used country wide in panama. Its very similar situation to the northern us states that see the canadian coins sparsely intermixed in the cash register coinage. The advantages to this are vast. Panama does not have a federal reserve bank that loans money to the government while the government prints money, sparing the populace a massive interest debt to the reserve banks for the taxpayers to pay off. This is the case in the usa, uk, most of eu etc. This means panama is spared all of this overhead of supporting bankers and this also means a lower cost of living to you the expat.

Now panama a country of 3 million people has an annual income of one billion dollars from the panama canal revenue. Imagine that much money spread amongst 2.7 million people. It is significant.

What this means for you the expat is the good life is a lot cheaper down here since the government is not trying to become your business partner like in most countries.

Additionally panama has no standing military. The people figured out that the military was being used to suppress them not defend against invading armies so they did away with it. This relieves the country of an enormous tax burden supporting a military that spends money like crazy. This again filters down to the people in that they do not have the government on their back like in usa, canada and the eu. What this means for you the expat is the good life is a lot cheaper down here since the government is not trying to become your business partner like in most countries. Actually not only is it cheaper down here, but the quality of life across the board is a lot better as you will soon see.

Panama taxes

Panama’s banking district panama does not tax offshore income!!!!! if you are an expat the odds are about 99% you have offshore income. If you have a pension, social security, investment derived income etc it is all tax free in panama. Imagine that! your home country like the usa may still tax you but that has nothing to do with panama. To incur panama income taxes you would like have to open a business in panama. You can be in panama living here as a tourist, resident, pensionado, or citizen operating a panama corporation that has customers out of panama, maintains an office in panama, banks in panama and still not have any panama income tax liability. Sounds unreal huh! for more information on panama visas, we recommend that you consult with a law firm such as panama legal. Panama does not need to tax it’s citizens into the ground. They do not criminalize business activities. They are not a lawsuit prone society. They are pro business - imagine that! for instance you can get a 20 year property tax exemption from buying a house as a pensionado. A pensionado visa means you are retired with some sort of income. This visa entitles you to all sorts of amazing discounts like 10% on a mortgage, airfare, movies, etc. Check with a panama lawyer for the details and to see if you can qualify (it is not very hard to qualify), we have lawyers listed on our website. You can get a 20 year tax exemption on a business that promotes tourism like a bed and breakfast inn and this exemption extends to income taxes and can also cover things like the taxes on the company car, fax machine etc. All this is going on while your country of origin (the old country) is doing all it possibly can to make staying in business harder and harder while bankruptcies rise along with unemployment in the old country. Unless you open a business that does business in panama within the local economy or take a job in panama you can plan on your income being tax exempt as offshore income. If you are from the usa you can actually get an income tax exemption from the irs to the tune of $80,000 a year per person if you legally live outside of the usa for 11 months out of the year plus extra exemptions for living expenses. As with all topics of a legal or tax nature in this website you should consult a competent attorney, we are not attorneys and are not providing legal, financial or tax advice anywhere in this website.

Unless you open a business that does business in panama within the local economy or take a job in panama you can plan on your income being tax exempt as offshore income.
Panama does have reasonable vat taxes on goods that range from 5% to 10%. New cars cost about the same as in the usa. There are very small new cars you can buy here for $7,000. Used cars are very popular here since repair labor is drastically less than in north america and used car prices are quite low. You can get a driver for $200 and a nicer used car for $5000 and up. There are a lot of japanese cars here, some bmw’s, few mercedes and porsche, lots of japanese suv’s mostly diesel. American cars not very popular here. If you live in panama city it is probably cheaper to take taxis than to have a car (taxis are real cheap here usually $1.25 to $3.00 for a twenty minute or so ride).

Panama housing

Panama city apartment building

Housing costs are not what they used to be. Housing prices are shooting up in recent years as more and more expats discover the advantages of life in panama. The peak in housing prices will be at the very end of 2007 or in 2008 (my guesstimate) then prices will stagnate for a while and probably fix there. A price decline would require a shortage of incoming expats which is something i do not see happening any time in the near future. Most expats are probably buying homes/apts for an average price of $160,000 taking into account many live in many different rural areas of panama (see our real estate section for details). As long as the expat can sell their current residence for more than the cost of their panama home they will keep coming. Many expats are getting $300,000+ for their current properties trying to cash out before the bottom falls out due to rising unemployment, rising interest rates, rising bankruptcies, energy costs affecting commuters and home heating oil costs soaring too. Many europeans are coming here to take advantage of the high euro. Since panama real estate is priced in dollars it is like getting a 20% discount for the euro buyer. Now when the euro falls and they sell their real estate which in panama is priced in us dollars thus when they convert back to euros post sale they will buy more euros with their dollars which would rise in value if the euro fell. Sort of a fail safe for the european speculators which there are plenty of these days.

I would speculate that panama city houses run about $1000 a square meter (a sq. Meter is slightly over 10 square feet). So a 200 square meter apartment (approx 2100 sq. Ft.) would be $200,000. Now this would be the starting price and you could surely negotiate this down somewhat. Prices in other outlying areas will vary so do check our real estate section for current prices and offering with pictures so you can see what you’d be getting. If you spent $8000 on a four bedroom house it would look like $35,000 of furniture stateside but would wear better and be more comfortable.

Rentals in panama city
Rentals in panama city Come in two flavors - furnished and unfurnished. Furnished units are hard to come by. Most furnished units will not have really nice furniture, got it’ the furnished apartments will usually have furniture that shows wear and may not be so clean, even if you spend $1900 a month. So what we learned was this. Furniture in panama is very nice and cheap, real cheap. Like a king size bed, no headboard with frame for $210. The mattresses are great, not cheap foam but hand built and firm. We bought a nice sofa, love seat, plush chair with an italian fabric we picked out, custom built for us in five days, delivered $595. The furniture here is not upholstery over fiber fill but solid foam, it is hand built and really solid. You can easily nicely furnish a 2 bedroom apt for $2000-$3000 assuming there are appliances which it probably will have. A nice brand new with warranty washer, dryer, stove, refrigerator will run about $1600 - $1700 delivered and set up. To really put the dog on and go first class for a 2 bedroom figure $5000 for furniture (not including appliances) and we are talking really nice stuff - rosewood, plush sofas with big pillows, solid wood all the way. If you spent $8000 on a four bedroom house it would look like $35,000 of furniture stateside but would wear better and be more comfortable. Dishes, lamps and stuff like that are really cheap. Consider not bringing your furniture down. Sell it and buy new stuff here with the proceeds, you can really do it. Anyway if you rent unfurnished there will be many more places to look at in the city or in the outlaying areas. Unfurnished rents are cheaper and you can take the savings and invest in your own furniture. Okay, in panama city you can get a nice two bedroom apt in a decent neighborhood where you will be happy for about $900. If you want to live in a high end neighborhood by the water it can get up to $1800 which would be top drawer. Three bedrooms would start at about $1000 for a nice apartment unfurnished up to $2500 for top drawer in modern buildings on the water on a high floor with anpanama city apartment view unobstructed view.

We saw nice furnished apartments with views, three bedrooms for $1100 a month. Most all of these building will have some view - city or water. There will usually be a balcony. There will usually be a swimming pool and a gym but do not expect much with the gym typically too under equipped to be of any value. There will be enclosed parking (2 spots usually) and very adequate security. Nice comfortable apartments that do have closets. In the outlaying areas rents are less and the amount of available rentals is also less with furnished rentals being especially hard to find. If the project of building the extra canal goes through it is expected to result in an apartment shortage due to extra workers being sent here by their companies which of course means you could buy an investment unit furnish it and rent it out for big bucks for many years while the new canal is being built, not kidding about this. As a pensionado, if you buy or build a new house, you won’t have to pay property taxes for 20 years, nor will you pay taxes on foreign-earned income. Make sure you check out our real estate section to get up to date prices on rentals and purchases.

Most apartments and houses have maids quarters. They are usually the size of a large walk-in closet with a full toilet attached and not air conditioned. This is the way things are down here. A maid will run about $200-$250 a month, her benefits will be about $27 a month. The maid is on 6 days a week, off sunday (is this why so many people eat out on sundays). The maid will cook, clean, do laundry and even shop for groceries. She may or may not iron - this is a sore spot with maids????? maids will also serve as babysitters but many have an additional nanny. You can also hire a driver for about same money if you let him live in. Some may elect to have a live in driver and have a day maid. Most dwellings only have accommodations for one servant to live in. A driver drives you to restaurants and then when ready to leave you call him on cell phone and he comes to pick you up in front, same for going to mall, movies, bank etc. He will also help with errands and around the house.

Panama health Care

Health care in panama will be better than what you are used to in the usa. I saw a specialist (ent) who spent almost an hour with me for $25.00. Doctors make house calls here!!!!! figure $30-$40 depending on what type of doctor is involved. The doctors here will all speak some level of english enabling you to convey your symptoms and understand what they want to do. You can buy many things over the counter at a pharmacy here that requires a prescription in the usa. They will not sell you narcotics, sleeping pills and that sort of addicting medicine without a prescription. I found drugs to be about 35% - 40% of the price charged in the usa. Not everything will be available but most drugs will be. Health insurance here is a mere fraction of what it costs in the usa. A family of four can get insurance for about $150 a month. Hospitals are clean and current and cost a mere fraction of what is charged in the usa. Many doctors practicing in panama graduate panama medical schools (they have 2 medical schools and 2 dental schools) and intern in panama as a requirement to get a panama medical license but then go on to get board certified in the usa as a specialist in a field they chose such as ent. So usa board certified doctors are available if you are so inclined but do give the panama doctors a chance you may be pleasantly surprised. Dentists are available and affordable. For instance: a filling to repair a broken tooth, x-rays, dentist administered cleaning and a fluoride treatment all for $89.00 and the dentist was american trained. Most elective medical/dental procedures in panama will run about 50% of the usa price. This would include: plastic surgery, cosmetic dentistry, dental implants, orthodontics, in vitro fertilization, gastric bypass etc. See our list of doctors and dentists for more info.

Groceries, utilities, cars, etc. In panama

Direct tv, telephone and internet services vary according to the plans chosen. Direct tv with a wide choice of english language channels is approximately $50 per month. For two televisions with one digital hookup cable service with an array of premium stations runs about $50 per month. Telephone service with unlimited calls in panama city runs around $35.00 a month. Vegitable stand
Electricity in panama is higher here than in the rest of the america, but with that said the over all cost of household utilities will be less than the average house in the usa. Of course this is relevant to your life style. It will depend on how much you run youre ac and how much you attempt to acclimate to the panama climate. For example, living on the 24th floor facing panama bay most mornings we have the front of our condo open (sliding patio doors fully across the front) through to the opposing back windows. We are able to pull a delicious breeze that makes the curtains stand about 80% of the time. On some days when we havent weighted the papers on my husbands desk down they have taken flight out to the balcony!
A full-time live-in maid costs $200 to $240 a month, a haircut or a shave can cost as little as $3; an afternoon at a beauty salon is $10 - $12. A cosmetologist will come to your house and do your nails for $10 or so and a masseur/masseuse will make a house call and give you a one hour massage for $15 or so.

Clothing in panama can be cheap or expensive. My wife gets great shoes for $7.00. I see gym shorts on el centro ave. For $0.49. In allbrook mall kids tops can be as low as $1.00, jeans for $4.00, womens jeans that look designer are $10.00, women’s linen 2 piece casual suits run about $20.00. Mens shoes start at $5.00, mens shirts go from $5.00 to $12.00. Now if you want to buy polo, boss, hilfiger, nautica, polo etc they are all available for about same price as in usa. You can pay usa prices for brands you are used to or pay 75% less for locally made goods (the stuff is more than adequate quality by the way) your choice. Visa and master card are widely accepted.

In summary panama city

Bayin summation if you live in an expensive part of the world you will probably have an equivalent lifestyle for here for at least 60% less ($8000 month lifestyle for $3200). If you live in a cheaper region you will probably save at least 35% moving here. I would say to be retired comfortably in panama city figure on $2000 a month for a couple - this would get you a nice 2 bedroom apt with a view, balcony, security, pool, a live in maid, utilities, phone, internet, taxis, groceries, medical insurance, necessities and occasional nights out. Beat that!!!! if you cash out a house you could do nicely on $1000 a month. If you budget $4000 a month to live on in panama city your lifestyle would take at least $12,000 to match in miami beach and probably $20,000 in new york city but you’d eat healthier, be safer, have better medical care, no cold weather and be happier.