Panama Real Estate News

The word is spreading that Panama is the place to visit, retire to or buy a second home. These are reprints of some recent stories:

Beauty and Tax Breaks Lure Buyers to Panama

Little wonder that Panama is increasingly lighting up the radar screens of those searching for an affordable alternative to more traditional south-of-the-border retreats in Mexico, Costa Rica and the Caribbean, where escalating prices increasingly rival those along America's own beachfronts.

Touted as the "next Costa Rica" by travel magazines and newsletters like International Living, Panama is undergoing a land rush as its Tocumen Airport fills with planeloads of eager foreigners with cash in hand.

Yet despite the price increases, property here remains a fraction of what one would pay for similar real estate in the United States. And with enticements like a 20-year suspension of property taxes to those who build houses or renovate in a historic district, and an income tax hiatus for those starting some small businesses, the opportunities are appealing not only for those seeking a place to retire but also for entrepreneurs.

At least that is what Douglas Lonneker, 39, and Gloria Esguerra, 28, are counting on. Eager to spend a few years in a foreign country before their 2-year-old child is old enough to go to school, the couple recently bought, as an investment, development property in the western highlands near Boquete and in Bocas Del Toro along the Caribbean Coast, as well as an apartment in downtown Panama City, where they plan to live full-time. A real estate investor and stock market trader, Mr. Lonneker was attracted by Panama City's thriving business community, including more than 100 international banks and a tax-free manufacturing zone, as well as a technological sophistication, including high-speed Internet service in his new apartment. "Everything works," he said. "And because it's a financial center for Latin America, it's easy to establish banking relationships and locate money managers and accountants. You don't get that in places like Costa Rica."

Then, of course, there is the lure of Panama City's urban lifestyle, including a young, hip population and a bevy of good restaurants, bars and nightlife. New York Times, February 2005

In Panama, American Retirees Finding More for Less

Golf course manager John Sutton had enough of lawyers, telemarketers, and the US government. So the San Diegan and his wife took early retirement, sold everything they owned, and moved to Panama.

Other US retirees are making similar moves, attracted by Panama's favorable tax treatment of foreigners, the relatively low cost of living, the lush surroundings, and the eternally mild climate.

"We got tired of the snow," said retiree Barbara Votava, who moved here from Spokane, Wash., with her husband, Bill, after he sold his business. ''This is as close to paradise as you can get."

In recent years, retired foreigners have been drawn to Costa Rica, Nicaragua, and parts of Mexico. But Panama's moment seems to have arrived. Boquete has turned up on several recent ''Best Places to Retire" lists. Los Angeles Times, February 2005

"The quality of life, the cost of living is a lot better"

than the U.S., says Mr. LaFoley, 56 years old, who owns a shopping center in Massachusetts.Countries like these are rolling out the welcome mat to Americans with a variety of financial incentives. The LaFoleys, for instance, are in Panama on a pensionado visa similar to what is available in Honduras, which lets them live there after proving they have $500 a month apiece in income. Panama also lets retirees import a car tax-free every two years, import $10,000 of household items tax-free, and buy property tax-free if it is the owner's only home. A century ago, Americans took over this country to complete and run the Panama Canal. In 1989, we sent in troops to arrest national leader Gen. Manuel Noriega, now in prison in Florida for money laundering. These days, Americans are threatening to take over Panama by more peaceful means: We're retiring here by the score. The biggest industry in Boquete, a town of 4,000 people located in an impossibly beautiful mountain valley full of whitewater streams and year-round tropical blooms, seems to be selling retirement homes to Americans. Prime ridgetop lots with a view of 11,400-foot Volcán Barú can be had for $100,000; you can buy a modest home in ticky-tack developments south of town for $40,000. The government is cooperating in this new invasion by giving 20-year property tax exemptions to new houses built by foreigners, which largely means Americans, Canadians and Europeans." The Wall Street Journal, June 2004

Money: Running Away to Retire

March 14 issue - After a lifetime in Minnesota, Randy and Rhonda Berg turned their backs on frigid winters, work and the high cost of living in the United States. They sold everything and retired to Costa Rica in 2002, enticed by reports of cheap real estate and a laid-back lifestyle. "The first week was an eye-opener," says Randy, 58, describing balky real-estate agents, an Internet-touted house that was "an absolute disaster" and the urge to head back home. They stuck it out, and now he and Rhonda, 48, have the retirement lifestyle of their dreams, complete with a sprawling mountaintop property, a custom-built home and household help, all for less than $2,000 a month. "There isn't anything that would entice me to move back," says Randy. The Bergs are part of a trend that demographers say will only increase as baby boomers start cashing their Social Security checks: Americans retiring to other countries where the prices are low and the living is easy. Hot spots like Costa Rica, Panama and Belize look like Florida circa 1970: new developments, proximity to water, no snow and lots of hype. Numbers are hard to come by, but some estimates put 11,000 American retirees in Costa Rica, 2,500 in Panama and more than 100,000 in Mexico, which got an early start. But not all of them are as deliriously happy as the Bergs. Folks who pack up too precipitously can get stuck in a bad situation without the means to get back home. Here's how to do it right: Grab retirement deals while they last. Most of these countries offer special visas and tax breaks for Americans who can prove they'll live on retirement benefits or imported income. In Belize you can bring in a car, your household goods and your bank account tax-free. Panama hands new American retirees a property-tax exemption and steep discounts on everything from movies to surgery. But nothing lasts forever: Costa Rica curbed its special breaks for retirees when it became too popular a destination.

Get real about real estate. You can live in a nice place by the water, and you can live dirt-cheap. But not at the same time. Panama boasts homes in the $150,000 to $200,000 range, but if you want to be on the ocean, expect to start at $300,000. And remember that you're buying property in a foreign country, where the procedures and laws are different. Most popular destinations have real-estate consultants who can walk you through the process. To get started, search online for Web sites that are populated by expat retirees already living in certain areas, like localgringos.com in Belize, and costarica-online.com. Ask the locals for recommendations.

Build surprises into your budget. Margaret Briggs, a Houstonian living in Belize, saw her property taxes rise from $80 to $800 overnight when the rules changed. Folks who retired to Spain in 2002, when 90 cents bought a euro, are not living quite so large now at $1.30 per euro. And there are some expenses you might not have had in the United States. You'll have to buy health insurance (say, $100 a month for a retired couple in Costa Rica), because Medicare doesn't pay in foreign countries. Some expats spend $300 or more a year for emergency-medical-transport insurance (see aaro. org), to fly them back to a U.S. hospital if they have big trouble.

Don't forget the tax man. Unless you're renouncing your U.S. citizenship (a move that few make), you'll still have to pay federal income tax. Some countries will even tax your Social Security benefits, notes Donald Walter, a Seattle CPA who earns his living preparing tax returns for expats.

Visit early and often. Even after you pick a country, you'll have to decide whether you want city or country life, an American-dominated gated community or an authentic small town. NEWSWEEK - March 14, 2005