Investing in real estate in Panama by renting the properties can be very profitable. However, real estate leasing laws are old and confusing to foreigners. Here is a summary of Panama rental laws:

The Civil Code of 1917 He copied the Spanish Civil Code that regulates the lease of real estate in rural and urban areas. Private residential properties whose rents exceed $150 per month, commercial and educational activities, and industrial use are covered by this law.

Law 93 of 1973 controls urban residential leases, subleases, room rentals, and furnished apartments up to $150 per month. Forty years ago, $150 a month was a hefty rent. Vacation (vacation) apartments that are rented for more than six months are also subject to this law. Tenants enjoy greater protection against rent increases and evictions than under the Civil Code.

Leases that are excluded from Law 93 include rural properties, reverted properties from the former Panama Canal Zone, fixed daily rate rentals (motels, inns, hotels and pensions), vacation home rentals for less six months and government leased properties.

Since foreigners will only rent properties for more than $150 a month, only the rights of tenants under the Civil Code will be covered here:

Income: Both parties can negotiate any monthly rental price and increases they want. Rental contracts are usually in Spanish. When foreigners rent to other foreigners, the contract can be written in Spanish and translated or written in both languages.

Security deposits: A security deposit equal to one month’s rent is sent to the Ministry of Housing, which refunds it to the tenant at the expiration of the lease, unless the landlord files a claim for back rent or damage to the tenant’s property. However, most foreigners are unaware of this requirement and many Panamanians ignore it by collecting the deposits themselves.

Lease Duration: There are no restrictions regarding the length of a lease. Landlords cannot evict a paying tenant before the lease expires. However, tenants may terminate any lease with 30 calendar days’ notice.

Utilities: Some utilities and services cannot be transferred to the tenant’s name, such as water and condominium homeowners’ association dues, which are paid by the owner and incorporated into the rental fee. Cable TV, Internet, phone, and electric may be in the name of the tenant who pays those bills. Commercial property bills, such as building maintenance, water, and utility fees, are generally paid by the tenant.

Triplicate: Prepare the Rental Agreement in triplicate. The tenant keeps one copy, the landlord receives another copy, while a third copy is filed with the Ministry of Housing, which also retains the security deposit. Again, many foreigners are unaware of this requirement, while many Panamanians simply ignore it by requiring only tenant and owner copies.

foreign they are typically required to provide the first month’s security and damage deposits. A Panamanian personal reference letter is often requested. Local bank checks or cash are preferred.

Repair Electrical, plumbing, and structural parts of the building are usually the responsibility of the owner.

to invest In Panama, real estate by renting apartments or houses can be very profitable. Some foreigners rent to multinational corporations that have regional headquarters here for their executive employees and visitors. Rent payments are often made via bank transfer and some pay by check.

Taxes they are paid by foreigners and Panamanians alike on their income. However, there are many tax write-offs and deductions just like in the US and Canada and European countries. An owner can write off maintenance fees, repairs, management services, real estate agents’ commissions, utilities, and other expenses.

Real estate agent commissions they usually consist of a month’s rent and since there is no MLS in Panama, it is not uncommon to see two or three real estate agents splitting the commission among themselves. The current law requires paying a tax of 7% of the ITBMS (VAT) in addition to the commission.

Realtor Services on behalf of the tenant generally includes the installation of cable television, internet, telephone, and electricity on behalf of the tenant if the tenant requests this service.

Hire a competent Panama real estate lawyer to advise you on real estate laws, landlord-tenant laws, and taxes before buying apartments or houses as an investment.