Financial Leasing of Real Estate

Law 179 of 2020, which regulates the financial leasing of real estate, enables a legal vehicle that facilitates the acquisition of real estate, by way of a new financing model. For many, the traditional burden of financing the purchase of a home, a commercial / industrial premises or even an office space, through the constitution of a full-price mortgage, is unaffordable. Under the “real estate leasing”, the interested buyer acquires the use and enjoyment of the asset through leasing, with a future purchase option. Regarding this modality, the payments that the “financial lessee” makes as lease fee will be recognized as part of the purchase price, in the event that he/she chooses to execute the purchase option upon termination of the contract (“leasing”). Hence, those interested in buying real estate under this modality, manage to avoid the disbursement of a costly initial payment that, otherwise, he/she would have required to obtain financing from scratch. Thus, the acquirer eases the onerous process of acquisition. Furthermore, this is one of the benefits, among others, provided by the Law, as an alternative option to buy real estate.

The financial lessee.

  • Any natural or legal person, who chooses the property to acquire, or defines the one that will be built, committing to the use and enjoyment of it in exchange for the payment of a rent as a lease.

The financial lessor.

  • It will be supervised and regulated by the Superintendency of Banks of Panama (SBP).
  • In addition to banks, trust, financial or leasing companies, any legal person, holder of a license to carry out financial business, granted by the Ministry of Commerce and Industries, previously authorized by the Superintendency of Banks, may carry out the financial leasing operation as a lessor.
  • Companies that request authorization from the SBP must pay a one-time registration fee of US $ 30,000.00. Addedly, an annual supervision fee of US $ 15,000.00.

Generalities of the Financial Leasing Agreement

  • In addition to the essential requirements for the validity of contracts, established in our Civil Code, this law includes certain aspects that must be incorporated in a financial leasing contract; namely:
  • The nominal and effective interest rate in order to determine the portion of the rent that corresponds to interest.
  • The acquisition price, to determine the monthly rent to be paid.
  • The formula or methodology for calculating the rent and the portions that will be applied to capital, interest and insurance.
  • The term of the contract, which may not be less than five years or longer than the period agreed between the financial lessee and the financial lessor, so as to cover the equivalent of the estimated advance and exercise the agreed purchase option.
  • It must be agreed that at the end of the leasing period, the financial lessee has one of the following options:
    • Return the property to the financial lessor.
    • Agree on an additional lease term based on predetermined fees or rentals or to be negotiated.
    • Acquire the aforementioned goods for their residual value or for the price agreed in the contract. The financial lessor and the financial lessee may agree that the acquisition of the real estate, object of the contract, is carried out by the financial lessee, or that, at the instruction of the financial lessee himself, the acquisition is carried out by a third party linked to the financial lessee, as determined by the parties.

Fiscal benefits.

For the financial lessee:

  • The amounts paid for rent corresponding to interest will be deductible expenses from tax. The annual limit amount to deduct is US $ 15,000.00
  • In the event that the sale price of the property is less than US $ 200,000.00, it may deduct up to 15% of the capital component linked to the monthly rent, during the first five years of the contract.
  • The rents paid will not be taxed with ITBMS, for a period of five years.
  • When the acquisition of the property is destined for main dwelling, agricultural purposes, non-profit entities and/or the public sector, it will be exempt from FECI withholding.
  • In the event that it chooses to purchase the asset at the end of the contract, it may depreciate it for its residual value or for the price agreed in the contract, for all tax purposes.
  • No real estate transfer tax will be generated if the purchase option is exercised and the sale is perfected; as long as you are the initial tenant.

For the financial lessor:

  • All taxes and other expenses incurred by it for the use and preservation of the property, such as the insurance premiums that cover it, will be deductible expenses from tax.
  • Exempt from the property transfer tax if it is transferred to the financial lessee at the end of the contract.


For the financial lessee:

  • It will be responsible for the payment of any tax, fee, encumbrance, contribution, fine, sanction, infraction or penalty on the real estate or that must be paid by reason of its use or possession.
  • It will be responsible for the conservation and maintenance of the real estate, including the payment of maintenance fees, when applicable.

For the financial lessor:

It will act as a withholding agent for real estate tax, regarding the real estate subject to the tax, excluding those that are considered as main dwelling or family assets.


Federico Moreno


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