Purchasing property in Panama using a corporation or a private interest foundation
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PROPERTY ACQUISITION UNDER PANAMANIAN CORPORATIONS OR PRIVATE INTEREST FOUNDATIONS.
This explanation was given to us by a trusted attorney based in Panama.
When exploring the purchase of property in Panama, one has the option of owning in three ways. You can own the property under your personal name or use one of two structures: A Panamanian corporation or Private Interest Foundation, depending on your needs.
The primary advantage of holding property under one of these structures is mainly based on estate planning purposes as it is important to consider the eventuality that owner (or one of the owners if the property is under both spouses names) passes away or becomes mentally incapacitated, as their heirs will have to file a succession process in Panama (through a court of law) which would cost considerable time and money. If the property is under a corporation or a foundation, it is very simple to make arrangements for your assets to go directly to whomever you designate.
Another important advantage to having your assets under a structure is due to lawsuits. In case someone wants to sue you, they would not be able to go after your property, as it will not be owned by you, but by a Panamanian company or a Private Interest Foundation.
Keep in mind that U.S. citizens have to declare income on all money earned in foreign jurisdictions. So please consult an accountant or a lawyer before purchasing the Panamanian Company or Private Interest Foundation.
As far as determining which structure is the right one, a general recommendation is based on the intended use of the property. For example if the property is going to be generating income, it is recommend to set up a corporation for tax purposes. If you are purchasing the property to live in it and will not be renting it out at least not initially we generally recommend a Private Interest Foundation as it can serve as a holding structure and also your living will.
The main difference between a offshore private foundation and a corporation is that a private foundation cannot conduct business but may own investments such as real estate, other companies, stocks, bonds, etc.
A Panama Foundation is not the legal personification of a person or group of persons and no owners exist in a Panama Foundation.
The assets of the Private Interest Foundation in Panama take on a separate legal identity from the personal assets of the Founder, Protector, Council Members or Beneficiaries. Traditionally, it has a specific purpose for the benefit of a general group of individuals.
Lola Miles
on said
Can I not buy property with my U.S. corporation name?
Kent Davis
on said
Hi Lola, you can but you would need to get it domiciled in Panama. Basically like a registered branch in Panama. Happy to introduce you to a Panama-based attorney should you need one.
Kristina
on said
Hello, I have a US-based nonprofit but would like to purchase the land next to mine (in panama) for the non-profit use. Would I open a private foundation in that case? Are non-profit activities considered “conducting business”?
Kent Davis
on said
Hi Kristina, we’ll send you an introduction to a Panama based attorney who can help you with your question on the private foundation rights and restrictions.
William Kingston
on said
“as it will not be owned by you, but by a Panamanian company or a Private Interest Foundation.
Keep in mind that U.S. citizens have to declare income on all money earned in foreign jurisdictions.”
Is that a contradiction? If I don’t own it (realestate) and do not receive income, rent, the PIF does, am I actually receiving income that must be declared?
Pete
on said
My guess is as long as you (individual) receive any sort of “pay out” from the PIF, it would be treated as some kind of “dividend/interest” that is where the income declaration from you (individual) comes into play.
I suppose one can simply keep all the income within PIF to play by the rule, as the individual never receive any payout from the PIF.