New Video- Affordable Beach Front For Sale

This short video shows off one of our beautiful beachfront properties.  

It also gives a brief tour of some of the places you can easily visit when you live in Puerto Armuelles. 

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Links

You can find more photos and details about this property by clicking here.

In the video, I mention a few links you may want to click.  Here they are:

Transcript of Video

Hi, this is Betsy of Living in Panama.


About the Property

We have a wonderful beachfront lot for sale in the charming beach town of Puerto Armuelles



This property has everything going for it:

  • Affordable
  • Flat
  • Level
  • Easy access
  • All utilities available
  • On a beautiful beach.

Also For Sale

The 2 adjacent properties you see are also for sale, -- which includes the yellow beachfront house we are currently remodelling. To find out more, click the link below

As I said, this property is in Puerto Armuelles, in the Chiriqui province.

Here we are getting closer; to get a Google Earth view of the property.

Price

It is only $54,500 dollars.



Near Services 

This beachfront property is in a great location. Just a block and a half from the Tsunami Inn which hosts a horseshoe game and expat hang out event every Sunday afternoon.

Even closer, in the other direction, are 2 restaurants. Las Juanas which is a seafood restaurant with outdoor seating right on the beach. It is really a great place to hang out.

Next to it is  Big Daddy's Hotel, which has a restaurant inside, with air-conditioning. 

There are a couple of small grocery stores within a block or two of the property. Puerto also has a great Romero grocery store as well as others about 5 minutes away.

Nearby Things To Do

This property and Puerto Armuelles, in general, can take advantage of all that Chiriqui Province offers.

It is only an hour day trip down to visit Mono Feliz and maybe feed the monkeys.

You can take a swim in front of your property in the morning and then go take a hike in Volcan or Boquete or Cerro Punta and be back at your beachfront home after a leisurely day.

David is about an hour and 15 minutes away. Its the biggest town in Chiriqui, Puerto Armuelles is the 2nd biggest, but David is definitely the shopping mecca. You can get pretty much you’d ever want there. And it keeps growing in that way. (e.g., a huge expansion of the Chiriqui Mall in David is currently underway)

And even outside of the Chiriqui province you can go along up this way to Almirante and take the ferry to Bocas del Toro for maybe a long weekend.

Or you can go right over here and visit Costa Rica.

About Puerto Armuelles

Or you could simply hang out in Puerto Armuelles.


Chiquita banana built Puerto Armuelles from scratch starting in the late 1920s. They put a unique stamp on this charming beach town. Including building whole neighborhoods of wooden houses on stilts.



Today Puerto is a charming beach town.


In fact, it is the only true beach town in Panama.



It has pretty much everything you need to live comfortably, including a great beach life, whether for you that is walking on the beach, boogie boarding, stand up paddleboarding, or surfing, or going there to buy fish from the fishermen.

More Info

For more information on this property, please contact us at our site, LivinginPanama.com or click the link below.

Please give us a thumbs up if you enjoyed this video and don’t forget to subscribe (YouTube).


You can explore more properties in Puerto Armuelles here.  

And you can learn more about our charming beach town starting here

brown cow looking straight ahead on a green hill
Just you, rolling hills, ocean views - and some cows.

Almost all of our properties are either on or near the beach.  But not this one.

This is a 13 acre ranch (finca), but with fabulous views of the ocean.

This property would appeal to someone who loves horses and a ranch lifestyle.

Also it is noticeably cooler up on this finca than down at sea level.

We have only recently listed this property.  The adjacent ranch owner had wanted to buy it, but he recently informed us that he cannot swing it.

Find more photos and information on this finca here.

Please let me know if you have any questions.

 

 

beach background with text about Living In Panama Info Book
Click image to download

This pdf contains many affordable beach properties for you to explore.  

It includes links to get more photos and information on each property. 

You will also find a map of Puerto Armuelles with photos on it too.

If you are looking at property, it is worth your time to check out these hand-picked properties.

If any of them spark your interest, feel free to call or email us with your questions or to schedule a tour.

Click to download the pdf.

 

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Click to get more details about this Puerto Armuelles beach front house for sale.

We are always happy to answer any questions you may have, just shoot us an email, or give us a call.

You can read what I said in the video below.

Video Transcription

Hi, I’m Betsy from Living In Panama

I want to let you know about a very affordable beach front house we have for sale

It is only $87,500.

It is on a beautiful beach

The lot is ample at 6100 sq. feet.  

The house is 1350 sq. feet. It has 2 bedrooms, 1 bath

It needs some remodeling, although you can move in as is.

All utilities are set up and functioning.

The metal roof does need some immediate repair.

It is in the charming beach town of Puerto Armuelles.

Which is located right on the Pacific Ocean in the popular Chiriqui Province. 

It really is an ample lot, with a nice house, on a beautiful beach for a very affordable price.

If you have any questions, please click the link below to find out more and to contact us by phone or email.

Thanks for watching

Image of Uncle Sam and text about what you should know about US taxes before buying overseas real estate
Don't get caught by surprise. Know how buying Panama property will impact your US taxes

I tend to file my US taxes in October.  

Many years ago, our accountant told us that people who request a filing extension are much less likely to get audited.  

Since then I have used that fact to justify requesting a tax extension each year.

This means I filed my 2015 taxes only a week ago.  As I did them, it reminded me of how taxes are both the same and different for Americans abroad.

US Taxes & International Real Estate

Taxes are something you should think about before you buy or sell international real estate, no matter what your home country. However, I can only speak to the impact on Americans.

If you are an American thinking about investing in Panama or other international real estate, you should know how it will impact your taxes "back home".

If you are a US citizen, the IRS requires you to pay taxes whenever you sell offshore real estate.

Actually, you are required to pay U.S. taxes on any and all of your worldwide income, which includes all passive and investment income.  For Americans, income is taxable as earned, no matter where you reside.

Offshore real estate is taxed at the same tax rates, the same allowable deductions for expenses, and the same available credits. The only exception is in how depreciation is handled.

Keep in mind, active investors, real estate professionals, and those who buy using a retirement account are exceptions to this rule.

I will describe how various overseas transactions can impact your US taxes below.  (For purposes of this post, I will assume a US long term capital gain rate of 20%.)

Federal Tax Credit - Avoid Double Taxation

The only deduction available for passive income (such as real estate) is the foreign tax credit.  The purpose of this deduction is to eliminate double taxation on investment income.  Don't get too excited about this deduction, it in no way allows you to pay less in total taxes (US and foreign country taxes combined).

The IRS allows you to deduct or take a dollar-for-dollar credit for any taxes paid to a foreign country.  In practice, this never works out perfectly, but it does eliminate most double taxes. How much you can deduct depends upon the tax rate of the country your land is located.  Here are some examples.

Capital gains tax of 33% (Columbia)

Say you bought a property in Medellin, Colombia in 2005 for $100,000. In 2013, you received an offer you couldn’t refuse for $150,000, giving you a capital gain of $50,000. The capital gains tax rate in Colombia is 33%, so you pay $16,500 to Colombia.

Since Columbia's rate (33%) is so much higher than the US (20%),  you wouldn't owe any tax to the US.   In this case, you would report the sale on Schedule D of your US personal return and deduct or take a credit for the $16,500 you paid to Columbia on Form 1116.  This would allow you to pay $0 to the IRS.

Capital gains tax of 10% (Panama)

Now let’s say you sell a property in Panama.  Panama's capital gains are taxed at 10%.  In this case, you will pay 10% to Panama and 10% to the United States, to arrive at the US's 20% rate for long term capital gains.

Capital gains tax of 0% (Costa Rica)

If you had this same transaction in Argentina, Ecuador or Costa Rica, where real estate sales are not taxed, you would pay the full 20% capital gains tax to the IRS.

Important Note: When deciding in which country to buy real estate, that country’s capital gains rate only comes in to play if it exceeds the US rate. If a country’s capital gains rate is 0% to 20%, you will pay 20% in total. If a country’s rate is more than 20%, then only the excess should be considered in your decision. For example, Columbia's higher tax rate of 33%, means you will pay more (13%) in capital gains tax than if that property was in Panama or Costa Rica.

Caution, while you may think you are saving money by buying and selling land in Costa Rica because they have no capital gains tax, it might not be the case. Costa Rica and other such countries have other taxes and duties to make up for their zero capital gains rate.  Taxes which might not be deductible on your US return. In most cases, you are better off buying property in a country whose tax system is similar to the United States.

Tax rate & Foreign Earned Income Exclusion

The Foreign Earned Income Exclusion (FEIE) does not affect your U.S. tax bracket, nor does it reduce your adjusted gross income amount, which is used in calculating your capital gains rate.

For example, a husband and wife who qualify for a FEIE with individual salaries of $100,800 in 2015 will pay $0 U.S. Federal Income tax on their salaries. However, their adjusted gross income for determining capital gains rates will be $217,200.  This means that their long term capital gains will be taxed at the blended 18.8% rate.

This also means that every dollar earned in excess of the FEIE is taxed at the 28% or 33% tax rate. Keep in mind, your tax rate does not start from zero after taking the FEIE consideration.  Also FEIE does not apply to retirement or other investment income.

Note: to qualify for the FEIE you must either pass the IRS's physical presence test or the residence test. The physical requires that you are out of the United States for 330 out of any 365 day period. The residence test is more complicated, but in general it requires your intent to move to another country and that you are in the US for no more than 3 to 4 months a year.

The Big IRA Offshore Loophole

The exception to the same tax rate rule above is offshore real estate held in an IRA. By purchasing offshore real estate in your retirement account, you can defer or eliminate US tax on both rental profits and capital gains.

If the country where your property is located doesn’t tax the sale, then you just might avoid the tax man all together. If the country taxes you at a relatively low rate, such as Panama at 10%, this might be the only tax you pay (ie. the IRA cut your total tax bill by half with this exception).

Let me explain: If you move your IRA or other type of retirement account away from your current custodian and into an Offshore LLC, you can invest that account in foreign real estate. The LLC is owned by your retirement account and holds investments on behalf of that account. You buy the rental property in the name of the LLC, pay operating expenses from the LLC, and profits flow back in to the LLC and into your retirement account.

This only applies to investment rental real estate and not property you personally occupy. If you later decide to live in the property, the funds must first be distributed out of the retirement account and any applicable taxes paid.

If you wish to purchase offshore real estate with funds from your IRA and a non-recourse loan, or you are in the active business of real estate, you can add a specially structured offshore corporation to eliminate US tax.

If you buy real estate with an IRA in the United States, you get the joy of paying tax on the gain attributed to the money you borrow (the mortgage). If 50% of the purchase price comes from your 401-K and 50% from a loan, half of the rental profits and half of the gain is taxable, with the other half flowing in to your retirement account.

Take this same transaction offshore and no US tax is due. Tax free leverage in a retirement account is one of the great offshore loopholes.  This is often called using a self-directed IRA.

Offshore Real Estate & Depreciation

Owners of rental real estate in the United States can use accelerated depreciation to deduct the value of property over 27.5 years. However, if the property is offshore, a straight-line depreciation must be used over 40 years. The straight-line method gives you less bang for your depreciation buck.

This means that on a $100,000 rental property, your annual depreciation deduction would be about $3,636 for a US property vs. $2,500 for a foreign property.  So you would pay a premium of $1,136 on the overseas property.

It may sound like an issue, but it isn't necessarily.  A straight-line depreciation can also save you money. Accelerated depreciation is great if you plan to hold the property for about 20 years. However, if you plan on buying, improving and selling over a short period (a few years), then accelerated depreciation will cost you money, not save you money.

This is because depreciation is “recaptured” when you sell the property. Every dollar you were allowed to deduct over the years must now be paid back.  It is added to your basis, and taxed at 25% rather than 20%. So, as a rough example, if you have a gain of $50,000 and took depreciation of $20,000, you owe tax at 20% of $50,000 for $10,000 plus 25% of $20,000 for $5,000. Therefore, you total tax due is $15,000.

The more depreciation you take, the more you must repay. If you hold a property for many years, taking a deduction today, and paying it back in the distant future, is a benefit. If you will sell the property in 3 or 5 years, taking the deduction now, and paying an additional 5% in tax later, is of little to no benefit.

People can be shocked at the size of their tax bills from the sale of a rental property. They had planned for a 15% rate (the previous long term rate), and ended up at 20% + recapture. In States like California, where values property values have gone down, it is possible to sell a rental at a loss and still have a big time tax bill from recapture.

This might lead some to think a good strategy is to not take depreciation, especially on property you plan to flip ASAP. Well, the IRS has a surprise for you: The tax law requires depreciation recapture to be calculated on depreciation that was “allowed or allowable” (Internal Revenue Code section 1250(b)(3)). This means you will pay tax on depreciation whether you take it or not.

All of this is to say that not being allowed accelerated depreciation on offshore real estate might be a good thing.

Primary Residence Exclusion & Offshore Real Estate

As I said to begin this article, all of the same US tax rules apply to offshore real estate that apply to onshore properties. This holds true for the primary residence exclusion.  If you qualify, you can exclude up to $250,000 single or $500,000 married filing joint, from the sale of your primary residence.

To qualify, you must own and occupy the home as your principal residence for at least two years before you sell it. Your “home” can be a house, apartment, condominium, stock-cooperative, or mobile home fixed to land anywhere in the world.

Tax Tip: You can take the $250,000/$500,000 exclusion any number of times. But you may not use it more than once every two years.

Have you owned and been renting out a property in Panama for a few years? You might consider kicking out those renters, moving to Panama, and occupying the property for two years before you sell.

Did you convert a home from your primary residence to a rental property? The rule is that you must have lived in the property for 2 of the last 5 years to qualify for the exclusion. Therefore, you can live in it for two years, rent it out for up to 3 years, and then sell and get the full exclusion.

To get the $500,000 exclusion, both a husband and wife must live in the home as their primary residence. It is possible for one spouse to qualify while the other does not. For example, husband is living in the United States and visiting his wife and family in Panama. On a joint return, only the wife may take the exclusion for $250,000 when they sell the home in Panama.

You don’t need to spend every minute in your home for it to be your principal residence. Short absences are permitted—for example, you can take a two month vacation and count that time as use. However, long absences are not permitted. For example, a professor who is away from home for a whole year while on sabbatical cannot count that year as use for purposes of the exclusion.

You can only have one principal residence at a time. If you have a home in California and a condo in Panama, the property you use the majority of the time during the year will be your principal residence for that year. So, it would be possible for Panama to be your primary resident for one year and California to be your primary residence the next. Before you sell, make sure you have spent at least 2 of the last 5 years in the property.

Like-Kind/1031 Exchange & Foreign Property

Because you get the “benefit” of all US tax rules when it comes to offshore real estate, you can use like-kind exchanges (also called a Section 1031 exchange) to defer US tax. The only caveat is that you can’t exchange US property for foreign property – it must be a foreign property for foreign property transfer.

In a like-kind exchange, you defer paying taxes by swapping your property for a similar property owned by someone else. The property you receive is treated as if it were a continuation of the property you gave up. The benefit is that you defer paying taxes on any profit you would have received.

You may only exchange property for other similar property, called like-kind property by the IRS. Like-kind properties must have the same nature or character, even if they differ in grade or quality. All real estate owned for investment or business use in the United States is considered to be like kind with all other such real estate in the United States, no matter the type or location. For example, an apartment building in New York is like-kind to an office building in California.

All real estate owned for investment or business use outside of the United States is considered to be like kind with all other such real estate outside of the United States. Therefore, you can exchange an office building in Panama City, Panama for an apartment building in Medellin, Colombia. You may not exchange a property in Panama with a property in New York.

Combo Deal: Yes, you can combine a 1031 exchange with the $250,000 primary residence exclusion. To qualify for both, you must hold the property for more than five years and live in it for at least two of those five years. Then, you can use the exclusion to reduce or eliminate the capital gains, including tax carry-over from a like-kind exchange.

Offshore Rental Properties & US Taxes

Rental income and expense from offshore real estate is reported on your personal return, Schedule E, just as a US rental property would be. You must keep rental records, including all expenses from management, improvements, repairs, and taxes paid. You must follow all US tax rules for these deductions and expenses, such as depreciating improvements and deducting repairs.

The IRS has a right to audit your offshore real estate, so be ready. It may be common to pay your bills in cash in Colombia, but you will have a tough time deducting any expenses without a receipt and proof of payment (such as a cancelled check).

An area of emphasis in an audit of offshore real estate is travel and other expenses associated with visiting the property. If you are flying to Panama five times a year, hanging out for a week, and then expensing these trips against your one rental unit on Schedule E, the deduction will not survive an audit.  On the other hand, you most likely can expense one trip a year, more if you have a large portfolio overseas.

When reporting your rental property, remember to take depreciation. As stated above, the only difference in offshore real estate is the allowed depreciation method. You must utilize straight-line depreciation over 40 years.

US Tax Filing Obligations for Offshore Real Estate

Your offshore real estate may come with a number of new US tax forms to file. It is important you file them or you may face substantial penalties if you are caught.  These penalties are aimed at Americans hiding money offshore, but they could ensnare you as well.

FBAR

The most critical offshore tax form is the Report of Foreign Bank and Financial Accounts, Form TD F 90-22.1, referred to as the FBAR. Anyone who is a signor or beneficial owner of a foreign bank or brokerage account (or combination of accounts) with a value of more than $10,000 must disclose their account(s) to the U.S. Treasury.

On your tax return you will be asked if you have such an account.  The question is answered with a simple yes or no.  But that is not the end of it.

You must also remember to send in the separate FBAR form. But you don't send it to the IRS, you send it to the US Treasury Department.  Oddly it is due, or was due, on June 30th.  No extensions.

New FBAR Due Dates

However, for calendar year 2016 and beyond, the due date is April 15th, with an automatic extension of 2 months for US citizens living abroad. Also an extension is now available, which moves the FBAR due date to October 15th.

I can see myself taking that extension. It is so much easier to do all the forms at once, and not have staggered due dates.

Other Required IRS Forms

Other tax forms may be required if you hold your property in a foreign corporation, LLC, Panamanian foundation, or international trust.

 Offshore Real Estate Professional Benefits & Definition

If you are living and working abroad and in the business of real estate, you can realize some great tax benefits. The following section is for those who spend a significant amount of time and effort working their offshore properties, and not those with only one or two apartment units.

The typical investor in offshore real estate may only deduct his losses against other passive income. If you do not have any other passive income, losses are carried forward until you can use them.

An exception to this rule applies to a) active participants and b) material participants in the management of offshore real estate.

As an active participant in offshore real estate, you can deduct up to $25,000 of passive losses against other income (like wages, self-employment, interest, and dividends) on your US tax return.  This allowance is phased out on a 50% ratio if your adjusted gross income is $100,000 or more.

If you are a material participant in offshore real estate, you are much more involved and in control than an active participant. As a material participant (sometimes referred to as a real estate professional), you are in the active business of real estate and may deduct your expenses against any and all of your other income, without limitation or AGI phase-out.

It is relatively easy to qualify as an active participant. It is far more challenging to be classified as a material participant in offshore real estate. If you can meet the criterion, you will find that there are major international tax breaks and loopholes available to the real estate professional.

NOTE: The major benefit of being offshore and material participant / real estate professional is that you may draw a salary from an offshore corporation and qualify for the Foreign Earned Income Exclusion. This tax break is only available to offshore professionals and not those living or working in the United States.

In order to materially participate in offshore real estate, you should be living and working abroad. It would be near impossible to qualify as materially involved in properties in Colombia while living Texas. Therefore, you should also plan to qualify for the Foreign Earned Income Exclusion (FEIE). When the FEIE is combined with an eligible offshore real estate business, you can take out up to $108,600 (in 2015) in salary from that enterprise free of Federal income tax and make use of a number of other tax mitigation strategies.

In other words, a qualified offshore real estate professional can deduct his or her expenses against all other income, regardless of source and without limitation based on his or her AGI, and draw out up to$108,600 in profits free of Federal income tax. If a husband and wife both qualify as material participants and for the FEIE, they can each take out a salary of$108,600, for a total of $217,200 of tax free money.

Again, to qualify for the FEIE, you must be out of the US for 330 out of 365 days or a resident of another country. If you are a resident of another country, preferably where your properties are located, then you can spend up to 4 months in the US each year.

Amnesty or Catching Up with US Taxes

If, after reading this, you realize you have not been filing the required FBAR, not done your taxes correctly (or at all); no worries.  Just make sure you file before you are caught.  The IRS has an amnesty program with no penalties if you voluntarily correct your past errors or omissions.  But you have to do it before the IRS calls you out.

Conclusion

For most Americans, filing your US taxes while living overseas is no more difficult than it is if you live in the USA.  However, there are some loopholes, exclusions, tax accounting, and tax forms you should be aware of  as an American living abroad, especially when it comes to offshore real estate.

NOTE:  I don't know the ins and outs of US taxes as well as this post makes it sound. While I did draw on some of my own knowledge, the vast bulk of this tax information comes directly from posts found on premieroffshore.com and greenbacktaxservices.com. And mostly from Christian Reeves, of premieroffshore.com, he really knows his stuff.  

If you need any help setting up your business structure or with your US taxes I would give premieroffshore.com a shout.  He offers a free and confidential consultation.   (I am in no way affiliated with this company.)
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Hi all, 

If you are interested in an affordable beach front lot, you should take a look at this video.  

It is a very sweet deal.  

The video also includes Google Earth and Map images.  This should give you a good context on the lot's location.

There is a link below the video if you want more information about the property.  And, of course, we are always happy to answer your questions by phone or email.

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..

Click for more details on this beach front property for sale.

Go here to browse all our Puerto Armuelles real estate

text about buying an empty lot over a photo of an empty lot
If the lot is not ready to be built upon, it will cost you money to get it that way.

Why Buy An Empty Lot?

Vacant land is the most plentiful and affordable type of property you can buy in Panama.

1) There is a lot of it. So there are many opportunities of buying the location you want at a price you can afford.

2) Vacant lots cost less.  Somewhat surprisingly, even a lot with a structure that looks like it should be torn down, is priced higher than a similar lot with no structure. Check it out for yourself. There must be some psychological reason for this.

3) Investing in a vacant lot carries very low overhead costs---and there is usually very little maintenance required.

4) You get complete freedom to build & landscape the way you want. You decide where on the lot the house will be built, and what it will look like. You decide the look and feel of your property. If you have never gardened before, this is the place to get started. To cultivate many species, you simply get a cutting, stick it in the ground, and water. If you plant in the rainy season, you can skip the watering part. The term tropical paradise fits gardening perfectly here.

Wide Variety of Lot Types

In Panama, you can buy a lot in the jungle with no infrastructure around --- not even a road --- or you might choose a lot in a sub-division, a place that has everything you need in place, ready and waiting for you to build your home.

More Remote = More Hidden Costs

Obviously, a lot that has everything ready to build your house will have no additional development costs.  While a remote jungle lot could have very high development costs.  Development costs are all the expenses necessary to get a site ready to start construction of a home.

Calculate the True Cost of a Lot

Before you jump to the conclusion that an undeveloped lot is a screaming deal, you must factor in all the hidden costs.  That is, how much will it really cost to get the property into “ready to build” condition.

The True Cost = Sales Price + 4 Hidden Cost Factors (described below)

You should calculate the true cost of a lot before you decide to buy.  This is true even if you only plan to hold the property and sell it when it goes up in value. Most likely the person you eventually sell the property to will want to build on it.  You need to make sure you are buying a lot that will be attractive and affordable to your future buyer.

4 Hidden Cost Factors of An Empty Lot 

  • Creating access road and/or driveway
  • Creating a building site
  • Bringing in utilities (water, electric, septic/sewage)
  • Cost impact due to distance from suppliers, builders, and labor

Road Cost Factors

Cost of the road or driveway will depend upon the lot’s

  • Distance from access road
  • Topography (and drainage/erosion issues)

If you fall in love with a lot that is far from an access road, it will obviously cost a lot more to develop than if your lot is near, or on, an already established access road.

If the property is on a steep slope, that will open up whole new realm of hidden costs.  Not only will the road cost a lot more and take more time, but you will have to deal with erosion and drainage issues. In a hilly area, you must take care to consider what to do with the water runoff so your new road won't be come a mud disaster. One key to a successful road is to put it in the dry season, not the wet season. After all the work of creating the road, you want it to stay usable for years to come not be washed out in the next big rain.

How To Keep Road Costs Down

If you want to keep your road development costs down, or at zero, you should pick a lot that is

  1. Near an access road.  Ideally, one which already has a good road leading right to it.  There are plenty of these types of lots for sale.
  2. Not in a hilly area. Carving a road on a slope, especially in the silty soil, is asking for headaches and unexpected costs.
  3. Near suppliers and laborers.  It will cost more and take longer if your lot is located miles from the hardware store, back hoe operators, etc..  Not only will you have to cover transportation costs, but sometimes it is hard to find someone willing to schlep all the way out there when they have plenty of work right in town.

Google Earth - A Real Estate Tool

With Google Earth you can discover topographically challenging lots from the comfort of your computer.  And you can use it to get a feel for the property before you visit it.  Google Earth is free and can be used with both Apple and PC computers.  To use it, you need to download the software and then search for your property by using its address or coordinates.

Now comes the fun part.  You can zoom in using your mouse/curser and the command (control for PCs) and shift keys on your keyboard.  Using the same controls, you can tilt the earth so you can see precisely where all the hills and valleys are on the lot and in the surrounding area.  If you don’t know the lot's coordinates or address, you can usually find them using Google Maps (if you can locate the lot by sight), or by asking the seller for them.


The Building Site

Now that you can access the lot, you need to get it ready for constructing a house.

  • Flat and level place to raise the house
  • All utilities to the site (electricity, water, and sewer or septic tank)

Flat and Level

Ideally, your site is already level.  Or it could simply mean removing some trees (just make sure to get a permit to do that) or adding a moderate amount of fill to level out the site.

If you are building on a slope, it will be more complicated. You may need a major earth building project including retaining walls and or drainage system.

Make sure you get a good ideas of the cost of these steps or it may come as an unwelcome surprise.

How To Keep Site Development Costs Down

If you want to keep your site development costs down, or at zero, you should pick a lot that is

  1. Already Flat & Level.  The less you have to do to make the site buildable, the less additional costs.  Ideally, one which already has a good road leading right to it.  There are plenty of these types of lots for sale.
  2. Near suppliers and laborers.  The same reasons you save money by being close to needed heavy machinery and labor to create a road, also applies to making a site flat and level.

We have many affordable and beautiful lots.  Almost all of our lots are ready to be built upon.  No site or road development is needed.  Many already have full utilities, or we offer to do that work at no extra charge. All are in the Puerto Armuelles area.  

You can explore our properties by clicking here or using the property search tool at the top of the page. 


Now on to getting utilities to your building site.

Electricity

Generally, there is electricity available along all of the main roadways and neighborhood streets in Panama.

In Remote Areas

If you are buying a farm, or other remote property, you will be responsible for bringing in electrical power from the nearest road, where you will access it via overhead power lines. You will need to install your own power poles, or underground conduit, to access this power. And of course, you will need a licensed electrician to obtain an electrical permit, even if you are going to do your own electrical installation.

Alternatively, you can always decide to be completely off-grid.  Just be sure to factor in the full cost of setting up and maintaining your own electrical system.  Of course, if your lot is extremely remote you will have to go off-grid.

In Developed Areas (e.g., Puerto Armuelles)

In Puerto Armuelles, we generally have good access to power lines by our electrical utility provider (Union Fenosa).  This makes electrical installation simple.

  • Get a permit at the local Union Fenosa (electricity) office. (A licensed electrician must apply for the permit, even if you will do the work yourself.)  
  • Build an electrical meter mount (just a short section of concrete block wall, with a roof overhead to protect the electrical meter from rain.)
  • Union Fenosa hooks up your meter to the overhead electrical lines.

Once you start to build your house, you can connect the meter to the house in 2 ways. You can either hang an overhead line, which enters through the roof of your home, or you can install underground conduit, with the supply wires running inside.  These wires connect the breaker panel to the electrical meter at the property line.  From the breaker panel, you can do your own rough in wiring, or hire an electrician.

Water

You can live without electricity, but not water.  How will you get water to your lot and future house.

In Remote Areas

Before you buy a property in a remote area, make sure you know how you will get water to the site.  It is likely that you are going to have to dig  a well.  If it is a well, check with an engineer to verify that you can actually build a well.  Find out how deep a well you will need to dig.  Then calculate the cost. If you are told there is a well there already, I suggest you check this out and test the water.


About Digging Wells

The good news about well digging in the rural areas around and as well as in Puerto Armuelles, is that it is very cheap.  In most cases, wells are dug by hand, using a shovel.  Our soil is silty/sandy, and it has no aggregates. (This is why it is not the most stable building substrate, and building footings should be deep and use plenty of steel reinforcement).

In short, a laborer digs your well, and then you line it with concrete pipe sections which are available in 4 foot lengths, and in many diameters from 10" to 2 or 3 meters.

Please be aware, hand digging is dangerous for the laborer.  You should check with the municipal engineer to find out the details for doing this safely and if the person doing the work is covered by insurance. You can make it safer by having the hole supported, or "cribbed" during the excavation.

The pipe sections used to line the well are very heavy. You will need to schedule a back hoe to have them installed.  You might just opt to use a back hoe for the entire well digging process, however the result will be quite sloppy.  Back hoes cut a very wide hole.  All that dirt will need to be stored on site until it is back filled.  The dirt excavated for the actual well hole will need to be stored or used permanently either on site, or off site.

And, of course, you can also employ a well drilling company.  There are some located in David.  Just look them up on the Internet. I have not used a well drilling company yet.  Obviously, this is the most expensive well digging option.


In Developed Areas (e.g., Puerto Armuelles)

In Puerto Armuelles (and other developed areas), most locations have access to the municipal water supply.

Hooking Up Water

To gain access to the municipal water supply, you simply cut in a connecting hub, or collar, into the ABS water line that runs alongside the street nearest your lot.  In Puerto Armuelles, this ABS pipe is likely to be 3" in diameter.

You can buy a connection collar at most of the local building supply stores in Puerto Armuelles.   You will need a permit both for the water supply line hook up and for any necessary street cut for the new pipe.  You will only need a street cut permit if the city water line happens to be located on the opposite side of the street from your property.   This street cut is performed by MOP (Ministry of Public Works).

I am fairly certain that you can apply for your own permit.  However, for the $20 that my plumber charges to do all the legwork of obtaining permits, I never get my own permits.   At all costs, I try to avoid waiting in lines at all of the various municipal offices.  I don't have the patience.


About Water In Panama

Service & Expense

Generally our water service is good. The water is abundant and cheap.  Our bill is under $5.00/month for unlimited use.

Interruptions in Supply

Many locations in Panama, including Puerto Armuelles, still experience occasional water shortages. In our area, these are not actual shortages, but rather interruptions to service.  Water service is temporally shutoff due to a highway building project, or occasionally, storm related damage to a water supply pipe during heavy rains.  Such interruptions are becoming less and less frequent. This is certainly not a chronic problem anymore, not the way it was 10 years ago.  In addition, the water to our neighborhood is shut off in the afternoon everyday.  I have never been clear about exactly why this is done.  But it is the reason almost every house in our neighborhood has its own water tank.

Install A Water Tank

It is never convenient to be without fresh water, even for a few hours. The easiest way to overcome this is to have your own water storage tank located on your property.  That way, you won't even notice when the municipal water supply is shut down for an hour, or even an entire day.  You will have your own backup supply on your property.

At our house in the Las Palmas neighborhood we have a 140 gallon emergency tank.  It is raised up on a platform about 12 feet above ground.  It fills whenever there is city water pressure. When the municipal water fails due to road work, which has been pretty common with the new highway construction, or due to the new water and sewer system being installed in Puerto, we are covered.  We also use it everyday as the source of our water after the city water is mysteriously turned off for the day. We have a gravity feed from this elevated tank directly to the house---we don’t use a pump. It has been years, since we were absolutely “out of water”.

Water Drinkability

Generally, water is drinkable in Panama.  Bocas del Toro is the only blanket exception to this rule.  In addition, at times, Panama City has issues with its water quality.

But again, overall, Panama's water is perfectly drinkable.  Much more so than some areas of the US (not even including Flint, Michigan).  My daughter still reminds me of how truly horrible the water is in the elegant neighborhood of Washington D.C. where her grandparents live. My parents happily drink that water.  They are used to it.  My children considered it to be unfit for human consumption.

Although the water in our town is drinkable, most expats and many Panamanians filter or buy bottled water.  Many people (like us) get bottled water delivered to their home.  Some people are concerned about water quality, but many people do it for aesthetic reasons.  In the rainiest times of the rainy season, the water from the tap can look cloudy.  That is what prompted us to start drinking bottled water.  We always use tap water for cooking, but for drinking we use bottled water.   At least we do at home, when we go out we happily drink the tap water.


Sewer or Septic Tank

You must include the cost of taking care of all the outflow from your home as well.   How you take care of this depends upon where your lot is located.

Out of Town & Remote Areas

Sewer service is only available right in town, or along the main roads.  If you are not in town, or on a main road, you will need to invest in a septic tank.

You are supposed to get a permit for most plumbing projects, including a septic tank.  This application must be submitted by a licensed plumber, even if this plumber is not going to do the work. Talk to your neighbors to learn more about how this septic tank permit & installation process is usually done in your area.

Installation of Septic Tanks

There are a variety of methods for installing a septic system. The very poorest people in Puerto Armuelles simply dig a deep well, line it with old car tires, and run their pvc waste line into it (or put an outhouse on top).

Most locals who can afford it, build 2 separate septic tanks out of concrete block.

The 1st one, in line from the house, captures the solids and lets the liquid flow off the top toward a secondary tank. This 2nd tank is filled with large round drainage rock.  (This rock is available from local rivers.  It can be delivered to your building site by local truck operators.)

This 2nd tank provides a drainage “field” which leaches out into the surrounding soil, and hopefully, filters out all dangerous bacteria, before flowing to a nearby stream, or the ocean.

You can also purchase black plastic (ABS) molded tanks from local building materials suppliers, or from suppliers in David.  Most suppliers in David offer delivery services to Puerto.

In Town - Sewer Connection

If your lot is in town, or off a major road, you can hook up to the municipal sewer system.  To connect to the municipal sewer pipe on your street, again, you must apply for a permit. Again, this application must be filed for by a licensed plumber, even if this plumber is not going to do the work.

The connection is a simple matter of cutting in a connecting hub to the municipal sewer line, usually 6” pvc pipe. Generally, homeowners connect their own 4” pvc pipe to this 6” pvc pipe. It is a simple procedure. Pipes are not buried very deeply. Generally not over 3 or 4 feet. Given that our soil is silty/sandy, this kind of work can usually done with a couple of laborers with hand shovels in half a day.

The entire connection process, including plumbing and backfill, shouldn’t take more than a day.  That is, after you have the permit in hand.

Factors in Utility Costs

Before you buy a lot, you should estimate the cost of permits, materials, and labor to get utilities to your building site.

Obviously, if all your utilities are already delivered to your lot, you will be saving both money and headaches.  If your lot is in a remote area, your "get your site ready" development costs will be a significant part of the true cost of your lot.  Also, don't forget to factor in the amount of time it will take to get all that infrastructure into place.

Bottom Line

The bottom line: Is the lot worth the price?

To know that, you first need to know the true cost of the lot.   True price = Sales Price + 4 Hidden Cost Factors

Which Is The Better Buy?

Calculating the true price eliminates many unexpected expenses.  It also allows you to knowledgeably compare seemingly diverse properties.  For example, knowing the true cost of properties allows you to know which of these similarly sized and located lots is a better buy:

  • Lot for $10K without a buildable site or access road
  • Lot for $30K with a ready to build site
  • Lot for $80K with an existing habitable house

Conclusion

Hopefully, you now have a better understanding of what it means to buy an empty lot.  As we explained, depending upon the lots location, getting an empty lot ready to build upon can be very easy or very challenging process.

You can find affordable & beautiful lots for your new house here.  

Hi all,

If you are looking for an affordable property only a 1 minute stroll from our favorite beach, check out this video.  It has a partially built house on it.

[leadplayer_vid id="5723DDF19745E"]

This property is in a great location.

It is only a 1 minute stroll from our favorite beach in Puerto Armuelles, Panama & a 10 minute drive from the town center.

It is a popular area in the Corazon de Jesus neighborhood.  In fact, already half the lots on this block are owned by expats.

And it is a pretty large lot measuring 7233 sq. feet (672 sq. meters).  So you could easily build a bigger house on it.

Watch the video and click the link below for more information

Click here for more info on this Panama property

If you have questions, we would be happy to answer them.

Just give us a call, shoot us an email, or leave a comment below.

Thanks for watching

sunset over hills with text about Panama ROP property
Learn about the costs and benefits of ROP property here

Rights of Possession (ROP) land is somewhat unique to Latin America.

It often makes North Americans uneasy.  But the concept is not as unfamiliar as you may think.

A little history may help.

In the beginning, land in Panama did not belong to anyone.  The indigenous people used it collaboratively.

Then the Spanish came.

They declared all land in Panama belonged to the Spanish Crown. However, the Crown only cared about the land from Colon to Panama City - for the same reason it is valuable now, as a port for global trade.

In the interior, the Crown continued the communal tradition of Panama's indigenous people by selling some land to villages to be owned collectively. Some large tracts of land were also granted to favored subjects.  On the rest, the Crown recognized the right of small farmers to use, but not own, as much land as they needed.

At that point it was a bit like feudal England.  The Crown was fine with you using its land as long as you played nice and obeyed the King or Queen.   And even after its grants and sales, almost all of the land in Panama remained untitled and in the Crown's domain.

Then, 300 years later, Spain left.   All of that land now belonged to the new government.

Not Much Titling Going On
The new Panama government asked its citizens to title any land they were using by showing proof of their land claim. But very few bothered to do that.

Getting title was an expensive and long process.  Even many of the wealthy folks didn't do it.  That's because once you title, you must start paying property and capital gains taxes.

Titling today is much cheaper and somewhat faster.  However, most land in Panama continues to be ROP with the government holding the title.  So in many ways it continues today the way it did when Panama was a colony of Spain.

When Even Titled Land in USA is Not "Yours"

Of course, as we all know, even in North America with its almost 100% titled property, government can step in.   Have you heard of Eminent Domain?  Trump and Cruz were arguing about it in a debate a few months ago.  That is, if the state needs your property they can come in and take it, with a "fair market" compensation, of course.  Trump and Cruz were arguing whether it was okay for the government to take land to build a parking lot.

What Does ROP Property Mean For You?

It means you can use the property any way you want, just as if you held title to the land. It means you own the right to use the land, just as if you had the title.

Except, because you don’t own the title, you don’t have to pay taxes.

3 Ways ROP Is Different From Titled Property 

  • More upfront legwork and research required
  • Need to maintain or improve property to show ownership
  • No taxes levied

Required Research 
Since ROP properties are not registered with the State, you need to make sure that the person selling you the property really owns it.  See this post on how to buy ROP property safely for more on how to do that.

To avoid doing that work, you can buy ROP land from someone like us who has done all that work for you.  We go through an extensive investigative process to ensure that there is a clear ownership trial and collaborative documentation for all our ROP properties.

Required Maintenance
In addition to research, you have to go out and physically claim your property in a noticeable way. Something that says there are new owners of this property.  We always recommend that you immediately put up a fence.  If a fence is already there, paint the fence.  At a minimum, have someone go out on a somewhat regular basis and keep the grass cut.  Just something so everyone knows that the property is owned and cared for by you.  You don't have to be there yourself, the fact that you are hiring someone to cut the grass is enough.  Or you could build a rancho or some sort of structure.

You are establishing that you are the new owner, the person that holds the right to use the property.  If there is ever a legal challenge, the court will ask for your proofs of ownership. That is when you pull out your evidence of activity.

We have been establishing ownership of our ROP property for years.  We put up fences on all our properties and maintain them.  We also get to know our neighbors. That isn't necessary, but it is a good idea for many reasons.  My husband especially loves to chat with all the neighbors.  He even knows the names of all their dogs.  Because of this there is no doubt in anyone's mind about who owns those properties - we do.  And that certainty of ownership is entirely passed on to you, when you buy our property.

Maintenance & Titled Property  Keep in mind, you need to keep your eye on titled property too.  If someone is using your land for 10 years in good faith (that is, they didn't know you owned it), they can get title. Or in 15 to 20 years if they are using it in bad faith (that is they know you own it, but decide to ignore that fact.)

Of course, that can happen in the States too.

My sister-in-law lost part of her land because for years she allowed a neighbor to garden a section of it.  When she went to sell it, she faced a legal battle to keep that "garden" as part of her land.  She lost.  Her neighbor is still gardening that strip. My sister-in-law sold her property minus that section.  She never got reimbursed for the loss.

You can avoid my sister-in-law's loss in both Panama and the US by simply having the people using your land sign a document. A document that states they are using the land on a temporary basis, or even better yet make it a rental agreement, even if only for a nominal fee.  That precaution works for both ROP and titled land.

Pay No Taxes

ROP property is excluded from property taxes and all land transaction taxes (i.e., capital gains, transfer fee).

Learn more about Panama property taxes & exemptions here

Selling ROP Property & Making Money

There is a big market for ROP property.  It is routinely bought, sold, and traded - just like titled property.

You can just as easily earn a profit reselling ROP land as titled land.

In fact, some people prefer ROP to titled property.   This is because, as I've mentioned, you don't have to pay property or capital gains tax with ROP property.  In addition, ROP land tends to be cheaper than titled land.

Conclusion

As I alluded to in this post, some of the same kind of land issues with ROP (and titled) property in Panama occur in North America as well (think of my sister-in-law's property loss and eminent domain).

Now that you have a clearer understanding of what ROP means, you can decide if the benefits of ROP land outweighs the costs.

Benefits of ROP land
  • No property taxes.
  • No capital gains tax
  • More properties to chose from since most property in Panama is ROP
Costs of ROP land
  • Need to do through upfront investigation and research
  • Need to have a regular show of ownership

Which type of property are you looking to buy?  Please share in comments below.

Want more information?  

Check out these links to get our guide to titling Panama property .  You can also read about 3 things you must do when you buy ROP property.

Sources: 
  • Panama's Poor: Victims, Agents, and Historymakers By Gloria Rudolf
  • “Property Law Innovation in Latin America”, by Steven E. Hendrix
  • Indigenous peoples, land tenure and land policy in Latin America by Thomas Griffiths
  • Marcos Kraemer of Kreamer & Kraemer Law Firm in Panama

If you have questions, please feel free to call us or leave a comment below.