Panama – Property Letting

How does the property letting process work in Panama?

Panama’s rental landscape is shaped by the Civil Code of 1917, which establishes the rules governing residential, commercial, and industrial leases. Foreign nationals hold the same letting rights as Panamanian citizens, meaning neither landlords nor tenants face any nationality-based restrictions when entering into rental arrangements.

Panama does not operate a highly formalised rental market. Most landlords source tenants through local estate agents, personal networks, or property listing websites. Finding trustworthy renters through local referrals is generally straightforward. Landlords typically screen applicants by requesting proof of income, personal references, and valid identification.

Evidence of financial capability — which may take the form of an employer’s letter, a tax return, or bank statements — is routinely requested. A character reference is sometimes also required. In essence, a landlord wants reassurance that the prospective tenant can meet rent obligations, and may request further supporting documents on a case-by-case basis at their discretion.

Lease agreements in Panama must be drawn up in writing, with a signed copy held by each party. Critically, only contracts drafted in Spanish carry legal validity. In contrast to various common-law systems where verbal agreements can have some legal standing, Panama mandates written tenancy contracts. Foreign landlords should have any agreement professionally translated and legally reviewed prior to signing.

Every contract must specify the duration of the arrangement — detailing the rental period (ordinarily between one and three years) and whether automatic renewal is an option — the rental amount and payment method (including the monthly figure, due date, and penalties for late payment), the maintenance and repair responsibilities of each party, and an early termination clause setting out the conditions under which either party may exit before the agreed end date.

Lease agreements must be documented in writing and registered with the Ministry of Housing to be fully enforceable. In Panama, all tenancy contracts should be registered with MIVIOT (the Ministry of Housing). This process benefits both landlord and tenant, as it provides a legal foundation in the event of a dispute. While registration is not always obligatory, it is particularly advisable for long-term contracts or those involving substantial sums.

What types of rental arrangements are available in Panama — long-term, short-term, and holiday lets?

Rental categories in Panama encompass residential leases for both short- and long-term occupancy, commercial leases subject to specific conditions for business use, and short-term rentals of fewer than 45 days, which are generally linked to tourism activity. Each category is subject to a distinct legal and tax regime, and understanding which framework applies to your intended letting model before bringing a property to market is essential.

For long-term residential lets — typically spanning one to three years — the regulatory environment is relatively accommodating for landlords once certain rent thresholds are exceeded. There are no statutory restrictions on how long a lease may run; both parties are free to agree on the duration and to include provisions for extensions.

Short-term and holiday letting is considerably more constrained, particularly within Panama City. Panama’s Decree Law No. 4 of 2008, together with subsequent resolutions issued by the Autoridad de Turismo de Panamá (ATP), establishes the framework for short-term accommodation: in Panama City, renting out an apartment for fewer than 45 consecutive days is prohibited unless the building is registered as a hotel or the unit sits within a mixed-use zone with the appropriate commercial licensing.

One of the most widespread misunderstandings around short-term rentals in Panama City centres on Law 284 of 14 February 2022, which governs properties under the horizontal property (PH) regime. Article 20 of that law permits the Assembly of Property Owners, by a 51% vote, to approve the acquisition of real estate by the PH itself for collective rental purposes — but this provision does not automatically entitle individual unit owners to list their properties on short-term tourism platforms for personal financial benefit.

Under Law 80 of 2012, property owners can lawfully participate in the short-term rental market by entering into arrangements with hotel operators. This model allows owners to place their units within a building or horizontal property complex under the management of a hotel operator, who then makes those units available as tourist accommodation. This pathway ensures compliance with local legislation and provides a legitimate route for owners to capitalise on short-term rental demand.

As platforms such as Airbnb and Booking.com continue to expand globally, Panama has taken active steps to clarify how these services function — particularly in popular tourism and expat destinations including Panama City, Boquete, Coronado, and similar areas. Locations such as Coronado operate under comparatively lighter regulation than Panama City, with fewer zoning constraints on short-term rentals and less stringent licensing requirements or enforcement. That said, this regulatory environment is actively changing — Bill No. 35 (under discussion as of 2025) proposes a national framework for short-term rentals, aims to provide legal clarity for Airbnb hosts, may remove penalties under Law 80 for hosts who comply, and introduces clear tax obligations modelled on those applying to hotels. Landlords should monitor these developments closely and verify the current rules with the ATP before proceeding with short-term letting.

What rental income can landlords expect in Panama, and how are rates set?

Setting an accurate rental price is essential to attracting tenants and achieving a reasonable return. To establish the right figure, landlords should research comparable properties in the same area, taking into account features such as amenities, neighbourhood character, and prevailing demand. Rental rates across Panama vary considerably by location, so a sound understanding of your property’s market value helps to avoid both underpricing — which erodes profit — and overpricing — which prolongs vacancy periods.

Rent control does exist in Panama, but its scope is limited to lower-value properties. While both parties may agree to rent increases after a specified number of years, rents below $150 per month can only be raised with prior written authorisation from Ministry of Housing officials. This provision stems from Law 93 of 1973. The Ministry will grant its approval based on the reasonableness of the proposed new rate relative to the tenant’s situation, and will also assess whether the landlord’s proposed return on investment is justifiable.

The executive authority may, by decree, exempt certain lease contracts from the scope of Law 93 based on the rent level. Executive Decree No. 37 of 15 September 1974 removed from the scope of Law 93 all residential contracts where the monthly rental exceeds $250, and all commercial, industrial, and educational lease contracts where the monthly rent exceeds $500.

In practice, the vast majority of properties targeting expatriates and international tenants — particularly in Panama City, Boquete, and coastal regions — sit above these rent control thresholds, allowing landlords and tenants to negotiate terms freely. Annual increases of between three and five percent are common but must be mutually agreed upon by both parties. Always verify the current applicable thresholds with MIVIOT (the Ministry of Housing), as these figures may be revised by ministerial decree.

Do landlords need to provide a furnished or unfurnished property in Panama?

There is no legal obligation in Panama requiring a landlord to provide a furnished property. Both furnished and unfurnished lets are widely available, with the decision largely driven by the target tenant profile and the property’s location. Properties in urban centres such as Panama City and tourist-oriented areas like Boquete typically command higher rents when fully furnished, especially where tenants are short-to-medium-term expat residents or professionals on corporate relocation arrangements.

Where a property is offered furnished, the condition and full inventory of the furnishings should be carefully recorded at the beginning of the tenancy. It is strongly advisable to prepare a comprehensive inventory of all furniture and fittings, along with a photographic record and written description of the property’s condition at the point of handover. This documentation serves as a vital reference point should any disagreement arise over damage or the return of the deposit at the end of the lease.

If the property is let furnished, issues such as appliance and furniture repairs and responsibility for minor damage — such as dripping taps or failed light bulbs — are typical matters that the tenancy agreement should address explicitly. Water and gas services are included in the rental price for many, though not all, furnished lets. Landlords should clearly set out in the contract which utilities and services are covered and which are the tenant’s responsibility, in order to prevent future disputes. Furnished properties operated under a short-term tourism model may also be subject to different tax treatment and licensing requirements — see the relevant sections on short-term lets and taxation above.

Do you need a licence or registration to let a property in Panama?

For standard long-term residential letting, Panama does not impose a specific landlord licence requirement. However, landlords are expected to register both the tenancy agreement and the security deposit with MIVIOT, and the property should carry valid title documentation before any letting begins. Foreign investors entering Panama’s rental market should be mindful of legal risks, and should ensure that property titles and registration documents are current and in order before proceeding.

The situation is markedly different for short-term and holiday letting. A fundamental requirement in this space is the official short-term rental licence, which is issued by the Panamanian Tourism Authority (ATP). A landlord can only lawfully accommodate short-term guests once this licence has been obtained. Operating without one exposes a landlord to substantial fines of around USD 5,000, and a significant proportion of listings currently visible on platforms such as Airbnb within Panama City do not meet the legal requirements.

Short-term operators must register with the Tourism Authority (ATP) through Panama’s National Tourism Registry (RNT), and must obtain a zoning certificate from MIVIOT confirming that the property falls within a zone where short-term letting is permitted. Compliance with fire and safety codes is also required. Landlords should contact the Autoridad de Turismo de Panamá (ATP) directly for current licence requirements, given that regulations in this area are subject to ongoing change.

Whether a property is held in personal ownership or through a Panamanian corporation can also have implications for registration requirements and tax obligations. Some investors choose a corporate ownership structure for ease of management and potential tax advantages — but this approach requires separate specialist legal and accounting guidance.

How do you obtain a landlord licence or register as a landlord in Panama?

The registration process varies depending on whether you are registering a long-term tenancy agreement with MIVIOT or pursuing an ATP tourism licence for short-term letting. The steps below address both routes. Always confirm current requirements and fees with the relevant authority before commencing, as procedures may change over time.

1. Verify property title and supporting documentation. Before letting any property, confirm that the title (escritura pública) is registered with the Public Registry of Panama and that no encumbrances or outstanding property tax liabilities exist. Your notary or legal representative can carry out this verification.
2. Prepare a written lease agreement in Spanish. Only Spanish-language contracts are legally valid in Panama. The agreement must include the full names and identification numbers of both parties, the rental amount, payment terms, the duration of the lease, the responsibilities of each party, and an early termination clause. Have the document reviewed by a local attorney before execution.
3. Register the lease and security deposit with MIVIOT. Landlords are legally required to lodge tenant security deposits with the Ministry of Housing (MIVIOT), equivalent to one month’s rent. Both parties should retain stamped copies of the registered documentation as proof of compliance and as a record for any future dispute. MIVIOT can be reached via www.miviot.gob.pa.
4. For short-term or holiday lets: apply for ATP registration. The tourist accommodation must be enrolled in the National Tourism Registry maintained by the Autoridad de Turismo de Panamá (ATP). Submit the required application form, evidence of property ownership, identification documents, and proof of compliance with applicable zoning and fire safety standards.
5. Obtain a zoning certificate (short-term letting). Short-term rental operators are required to obtain a zoning certificate from MIVIOT confirming that the property is situated in a zone where short-term letting is authorised. Contact your local municipality or MIVIOT directly to arrange this certificate.
6. Satisfy fire and safety requirements (short-term letting). Properties used for short-term accommodation must comply with relevant electrical and fire safety standards, including the provision of fire extinguishers. Buildings with 16 or more units must also meet accessible room requirements.
7. Register for tax purposes with the DGI. All landlords receiving rental income must register with Panama’s tax authority, the Dirección General de Ingresos (DGI). Rental income must be declared annually, generally by 15 March of the following year. Non-resident landlords should appoint a local tax agent or representative to manage their filings.

Fees for government registrations and ATP licences are subject to change. Confirm the latest application costs directly with the ATP and MIVIOT, as these figures are not always published publicly and are best confirmed with the relevant agency.

What are the rules around deposits in Panama?

Panamanian law requires landlords to lodge tenant security deposits with the Ministry of Housing (MIVIOT), set at one month’s rent. This mechanism safeguards tenants against unfair practices and provides a structured process for the return of deposits at the end of a tenancy. Unlike deposit protection arrangements operated in countries such as the UK and Ireland — where independent third-party bodies hold funds on behalf of both parties — Panama’s system channels deposits directly through MIVIOT.

The landlord is responsible for registering the tenancy agreement and lodging the deposit amount with the Ministry of Housing, and must provide the tenant with stamped copies of the relevant documentation. Both parties retain these stamped copies as evidence of compliance, which also provides an important record should any disagreement arise during or after the tenancy period.

When a lease concludes, the deposit may only be applied against unpaid rent or verified property damage. Adhering to this rule is essential to avoiding disputes and potential financial penalties. The deposit is to be returned to the tenant upon the conclusion of the lease agreement, and may be withheld only if the tenant has outstanding rent arrears or has caused damage to the property.

There is no statutory ceiling above one month’s rent for residential security deposits — the legal standard and common market practice is one month. Some landlords letting higher-value or fully furnished properties may seek to negotiate a larger deposit, but this would need to be agreed contractually and would fall outside the standard MIVIOT framework. Always verify the current deposit rules with MIVIOT, as ministerial guidance may be updated periodically.

Who is responsible for maintenance and repairs in Panama?

The tenancy agreement should set out clearly which party bears responsibility for maintenance, repairs, and any proposed alterations to the property. In Panama, as in most civil law jurisdictions, the general principle is that structural and significant repairs are the landlord’s responsibility, alongside ensuring that the property remains fit for habitation, while the tenant is expected to carry out routine upkeep and address minor wear and tear arising from their own use.

Tenants are not permitted to carry out structural improvements or internal reconfiguration of the leased property without obtaining the landlord’s consent. The tenant is required to permit the landlord access to carry out necessary repairs to the premises. This means landlords retain the right of entry for essential maintenance work, though providing advance notice is both best practice and a reasonable professional expectation.

In practice, the boundary between “minor” and “structural” repairs is frequently the subject of negotiation at the lease drafting stage. Responsibility for minor items such as dripping taps or failed light bulbs typically rests with the tenant. In a tropical climate like Panama’s, pest and insect control can represent a recurring additional expense, and clarity over which party bears this cost should be built into the contract from the outset.

Panama encourages mediation as a first step in resolving landlord-tenant disagreements. Where mediation proves unsuccessful, parties may pursue their claims through the civil courts — a route that tends to be both slow and expensive. To reduce this risk, some landlords incorporate a dispute resolution clause into the lease to facilitate faster settlements and minimise exposure to prolonged litigation. Including such a clause in the tenancy agreement is strongly advisable.

How are letting agents used in Panama, and what do they charge?

The established practice in Panama is for real estate agents to serve as intermediaries connecting landlords and tenants. Based on available data, there are approximately two thousand licensed real estate agents operating in Panama. This means identifying an agent is not particularly difficult, though landlords should exercise care in their selection, as some may levy charges beyond the rates originally quoted.

Letting agents in Panama typically offer a spectrum of services, from basic tenant introductions through to comprehensive property management. For landlords who find the day-to-day demands of property management burdensome, professional management companies — which are plentiful throughout Panama — can oversee the entire letting process, from screening tenants to coordinating maintenance and handling rent collection. Their charges generally fall in the range of 8% to 12% of the monthly rental amount (as of 2025).

Unlike certain markets — such as the UK, where the Tenant Fees Act 2019 prohibits most charges being passed on to tenants — Panama has no equivalent legislation capping what agents may charge tenants. In practice, agent fees for residential introductions are often borne by the landlord or divided between the parties, though this is agreed on a case-by-case basis rather than dictated by statute. Always confirm all fee arrangements in writing before formally instructing any agent.

When assessing prospective letting agents or property managers, verify that they are registered with the relevant Panamanian real estate authority and request references from existing landlord clients. The Asociación Panameña de Corredores y Promotores de Bienes Raíces (ACOBIR) is the principal professional body for real estate agents in Panama and represents a useful starting point. Confirm current market rates and any regulated fee structures with this organisation or a local legal adviser.

What taxes apply to rental income in Panama?

Panama’s tax system operates on a territorial basis. Both citizens and residents are liable to tax on income generated from Panamanian sources. Non-residents are similarly taxed only on income derived from Panamanian sources, and any tax owed on income paid to a non-resident must be withheld at source by the payer. This means that rental income from property located in Panama is taxable for all landlords, irrespective of their residency status.

Rental income generated in Panama is subject to progressive income tax rates. When computing taxable rental income, individuals may deduct certain allowable expenses from their gross rental receipts, including municipal and national taxes, maintenance and repair costs, administrative charges, and depreciation of the property.

Leasing immovable property in Panama attracts value added tax (VAT) at a flat rate of 7%, applied to gross rental income (as of 2025). Small-scale landlords may, however, qualify for an exemption from this charge. Landlords should confirm whether they satisfy the relevant exemption threshold with the Dirección General de Ingresos (DGI).

Rental income must be declared annually, generally by 15 March of the year following the relevant tax year. Tax may be settled in a single payment or spread across three instalments, due on 30 June, 30 September, and 31 December respectively.

Overseas investors are subject to the same tax rules as Panamanian residents with regard to their rental income arising in Panama. They should, however, pay particular attention to any double taxation agreements (DTAs) between Panama and their country of residence, as these may affect how their income is ultimately taxed. Seeking advice from a local accountant or tax attorney is strongly recommended to optimise your tax position and ensure full legal compliance. Panama currently maintains 18 double taxation treaties, making pre-immigration tax planning and coordination with advisers in the landlord’s home country a valuable exercise.

Where property is owned and rented through a Panamanian company, corporate taxation applies in place of individual rental income tax. Corporate income is taxed at a flat rate of 25%, and expenses incurred in the generation of taxable income are generally deductible. Some investors opt to hold rental property through a Panamanian corporation to achieve tax efficiencies and simplify the legal framework. This is a complex area and specialist legal and tax advice is essential before choosing this route.

What are the rules around ending a tenancy or evicting a tenant in Panama?

In Panama, the legal framework tilts in favour of the tenant — a landlord cannot immediately remove a tenant who is paying rent and has no alternative accommodation. This makes Panama’s system notably more protective of tenants than many comparable regimes, and landlords should factor this reality into their approach to both tenant selection and lease drafting from the very beginning.

Legislation tends to favour the renter, and a tenant may vacate a property — regardless of what the lease contract states — by providing the landlord with 30 days’ written notice. The tenant may bring the arrangement to an end at any time, provided they inform the landlord of their intention at least thirty calendar days before the intended departure date.

Panama’s eviction regulations are stringent and routinely side with tenants. Where non-payment of rent or breach of lease terms occurs, landlords retain the right to seek possession — but must serve written notice at least 30 days in advance and, if necessary, pursue legal proceedings. Given that evictions can take several months, lease agreements should explicitly address non-payment and property misuse from the outset.

The entire eviction process can take up to four months or 120 calendar days. The initial 30-day period covers service of process, the following 60 days are allocated to the trial, and the final 30 days are reserved for enforcement. This timeline is broadly in line with eviction procedures in other civil law jurisdictions across Latin America, but is considerably longer than in jurisdictions where accelerated possession procedures allow landlords to recover properties more swiftly.

To minimise the risk of protracted court proceedings, some landlords include a settlement clause in the tenancy agreement to facilitate faster resolution of disputes. Engaging a local attorney to draft a robust tenancy agreement — one that incorporates clear provisions addressing non-payment and dispute resolution — remains one of the most effective steps a landlord can take to protect their legal position.

What should expat landlords know about managing property remotely in Panama?

Overseeing a rental property from abroad in Panama is entirely feasible and is commonplace, given the country’s well-established expat investor community. That said, it requires careful legal and financial structuring to ensure full compliance with Panamanian law and to protect the landlord’s interests.

The single most important practical step for a non-resident landlord is establishing a formal power of attorney (poder notarial) in favour of a trusted local representative — typically a lawyer or professional property manager. This instrument authorises that representative to execute documents, liaise with MIVIOT, manage maintenance issues, and act on the landlord’s behalf in the event of a tenancy dispute. Powers of attorney must be notarised either in Panama or at a Panamanian consulate in the landlord’s country of residence.

Professional property management companies operating in Panama are capable of handling the entire rental process — from selecting tenants and organising repairs through to collecting rent and managing correspondence with official bodies. This is especially valuable for landlords who cannot attend to matters in person. A competent property manager will also coordinate with MIVIOT as required and assist with the preparation of annual tax returns.

Non-resident landlords are taxed only on income from Panamanian sources, and tax on any income paid to a non-resident must be withheld at source by the payer. In practice, this means that if a local agent or manager collects rent on your behalf, they may carry a statutory obligation to withhold tax from those payments before remitting the balance to you. The precise withholding obligations should be confirmed with a local tax adviser and the DGI before any rental arrangement commences.

Panama uses the US dollar as its legal tender (alongside the Balboa, which maintains a 1:1 peg with the dollar), which eliminates currency exchange risk for dollar-denominated investors and simplifies the process of repatriating rental proceeds. There are currently no restrictions on transferring rental income out of Panama, making it a relatively uncomplicated jurisdiction in this respect compared with several other Latin American markets. Landlords should nonetheless ensure that all income has been properly declared before repatriating funds, and should keep comprehensive records of all tax submissions.

Overseas investors are subject to the same tax rules as Panamanian residents in respect of rental income arising in Panama. They must, however, be especially attentive to any double taxation treaties between Panama and their home country to avoid paying tax twice on the same income. Consulting a qualified local tax professional — and, where applicable, a tax adviser in your home country — is strongly advisable before letting a property in Panama as a non-resident.

Frequently asked questions

Can a non-resident own and let property in Panama?

Yes. Foreign nationals hold the same property rights as Panamanian citizens, and overseas owners can hold, register, and let property in Panama without needing to be resident in the country. No nationality-based restrictions apply to property ownership or letting. Non-resident landlords must nonetheless comply fully with Panamanian tax law, including declaring rental income to the DGI and ensuring that any applicable withholding tax obligations are properly discharged.

Do I need a local agent to let my property in Panama?

There is no legal requirement to use a local agent for standard long-term residential letting. However, for landlords based overseas, appointing a local property manager is strongly advisable in practice. Property management companies in Panama can take responsibility for the full rental process — from tenant selection through to maintenance and rent collection — with fees typically ranging between 8% and 12% of monthly rent (as of 2025). For short-term tourist letting, working with a locally licenced operator or management company is generally essential to maintain legal compliance.

Is Airbnb legal in Panama?

Short-term rentals in Panama have long occupied a legally ambiguous position — particularly in Panama City, where a 45-day minimum stay rule has rendered conventional Airbnb hosting technically unlawful unless the property is situated within a designated tourism zone such as Casco Viejo. The official short-term rental licence is issued by the Panamanian Tourism Authority (ATP), and a landlord may only lawfully accommodate short-term guests once this licence has been granted. The regulatory environment is developing in 2025, so it is essential to check with the ATP for the current position before listing any property.

What is the minimum lease term in Panama?

There are no statutory restrictions on the length of a lease agreement; both parties are free to agree on the duration and to include options for renewal. Standard leases in practice tend to run from one to three years. For properties that fall within the scope of Law 93 of 1973 — that is, lower-value rentals — the minimum contractual term is three years.

How much is the security deposit in Panama, and where is it held?

By law, landlords must lodge tenant security deposits with the Ministry of Housing (MIVIOT), with the deposit set at one month’s rent. This arrangement protects tenants from unfair treatment and establishes a clear process for the return of funds at the end of the tenancy. This differs from deposit protection schemes operating in countries such as the UK and Ireland, where independent third-party bodies hold deposits on behalf of both parties. The deposit may only be withheld to cover unpaid rent or documented damage to the property.

How long does eviction take in Panama?

The maximum duration of an eviction process is up to four months or 120 calendar days — the first 30 days are allocated to service of process, the following 60 days cover the trial phase, and the final 30 days are set aside for enforcement of the eviction order. Panama’s system is widely regarded as more tenant-protective than those of many other jurisdictions, making thorough tenant vetting and carefully drafted lease agreements especially important for landlords.

What taxes do I pay on rental income in Panama as of 2025?

Rental income arising in Panama is subject to progressive income tax rates, and individuals may deduct allowable expenses — such as maintenance costs, administrative charges, and property depreciation — when computing their taxable income. Leasing property is also subject to VAT at a rate of 7% on gross rental income, though small-scale landlords may qualify for an exemption from this charge. Consult the Dirección General de Ingresos (DGI) and a local tax adviser for the rates and thresholds applicable to your specific circumstances (as of 2025).

Does Panama have rent control?

Yes, though its application is confined to lower-value rental properties. Monthly rents below $150 may only be increased with prior written authorisation from Ministry of Housing officials, as provided under Law 93 of 1973. Residential leases where the monthly rent exceeds $250, and commercial, industrial, or educational leases where the monthly rent exceeds $500, are excluded from Law 93 controls (as of 2025, per Executive Decree No. 37 of 1974 — verify any updates to these thresholds with MIVIOT). The majority of mid-to-upper market properties let to expatriates and international tenants sit above these thresholds and are therefore subject to freely negotiated rental terms.