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Worried about language barriers, unstable laws, or losing control of your property in a foreign country?
You’re not wrong to be cautious. For Canadian investors used to stable systems and legal clarity, international real estate can seem like a leap of faith. But what if we told you there’s a place where laws protect you, business is done in English, and investing is as straightforward as it is at home?
This isn’t a pitch. It’s Panama.
Let’s explore why investing overseas, specifically in this great destination, is actually a lot less risky than you think.
It’s not just the money. It’s the unknowns:
• Can I trust the legal system?
• Will I actually own the property?
• What if something goes wrong—who protects me?
• Will I understand the contracts?
• Is it even legal to rent out my property as an Airbnb?
• These concerns are valid. And when you look at Canada’s real estate scene today, many of these same questions still apply—even within our own borders.
Let’s break it down and look at the main pain points that make-or-break real estate investments.
Tax Laws & Rental Restrictions
There are two aspects of government regulations and policies which can affect a real estate investor in any jurisdiction. One is the restrictions on purchasing the property, and the other is the restrictions on rental and resale. These are extremely important to consider when making any real estate decision – even if it’s in the same country but in a different province or state.
For example, if you’re already familiar with the BC and Ontario real estate markets, you are no stranger to the long list of taxes and regulations. Besides the Federal Foreign Buyer’s Ban (2023-2027) which doesn’t affect local Canadian investors, in BC real estate investors have to navigate the BC Foreign Buyer Tax, Speculation and Vacancy Tax (SVT), and the Vancouver Empty Home Tax (EHT). Like they always say, ‘taxes’ seem to be a national sport here in Canada. Ontario has also implemented its own non-resident speculation tax (NRST), the Municipal Non-Resident Speculation Tax (MNRST) and the Vacant Home Tax (VHT). They must have whole floors in government buildings with paid bureaucrats coming up with these names and acronyms!
Although many of these taxes do not affect local Canadian investors residing in these cities, it would affect local Canadian investors who are not residents of BC and would want to invest in real estate in the Metro Vancouver area, as they would be considered a Satellite family and not full-time residents.
In addition to the extensive taxes and the federal foreign buyer’s ban, which already dampen foreign interest in Canadian real estate, short-term rental restrictions have become a significant hurdle for local Canadian investors, particularly in major urban centers like Vancouver and Toronto. Both cities require investors to obtain specific licenses to operate short-term rentals legally. In Vancouver, short-term rentals are strictly limited to primary residences, meaning investors cannot rent out secondary properties on platforms like Airbnb. Furthermore, the building’s bylaws must explicitly allow short-term rentals—a condition rarely met, as many condominium boards prohibit them to avoid increased transient traffic in residential buildings. Toronto follows a similar pattern, where most condo buildings also restrict or outright ban short-term rentals through their bylaws. For this reason, investors must conduct thorough due diligence when selecting a condo unit, carefully reviewing the building’s rules to ensure short-term rental compliance. Adding to the regulatory burden, Toronto imposes a Municipal Accommodation Tax (MAT) of 8.5% on all short-term rental revenues, further squeezing potential profits.
Besides all of the above, the tax implications to rent out your primary or non-primary residence anywhere in Canada is heavily monitored and regulated by the CRA (Canada Revenue Agency). Check the latest court rulings favoring the CRA’s strict criteria forcing homeowners to pay 13% sales tax if they resell their property which was used for Airbnb or other short-term rental services. You can take a look at this article titled ‘Homeowners who regularly rent on Airbnb and other sites must pay 13% tax on property value when they sell, recent tax ruling finds” News article regarding CRA tax ruling . The owner of the property can also lose the capital gains exemption for the proportion of the AirBnB years over the total years they owned the property (if it’s declared as their main primary residence – otherwise no capital gain exemption exists). There is a further adjustment to reduce the capital gains exemption years if the primary residence designation has switched from one property to another.
Considering all the above, restrictions, licensing, taxes and other government regulations, it does seem challenging at times to invest and earn positive passive income in the two largest real estate markets in Canada.
In Panama City, most of the new developments have short-term licenses by the developer to allow unit holders to rent out their properties on Airbnb or other similar platforms. Due to the high demand for tourists and visitors from Europe and North America coming to Panama City, either by air or through the cruise terminal, the short-term market is extremely robust and the local real estate market and municipal regulators support this cause. The developers in Panama City have already designated their projects for short-term rentals making it hassle free and easy for investors to identify their ideal property based on their short term and long-term goals, and do not require any further licensing or registrations to be applied by the new owners.
Landlord Protection and Eviction Laws
When purchasing a property as an investor, typically it’s expected that you would rent it out for additional income and perhaps covering your expenses (i.e. debt carrying costs in case you have a mortgage). Any investor would tell you that the local regulations protecting the landlord and tenant needs to be fair, yet efficient. Otherwise, the market will be filled with squatters (case in point; the Toronto rental market).
It is imperative to understand the local regulations in case a tenant stops paying rent, and how quick and efficient it would be to replace the tenant to get the investor’s cashflow back on track.
In Toronto it can take an average of 7 months to evict a tenant who has violated their tenancy agreement (this is in the best-case scenario). In Vancouver it’s quicker, and the process can take approx. 2-3 months.
The regulatory body in Panama City for landlords and tenants facilitates the process in case the landlord needs to evict the tenants. The process can take up to 4 months. Clear regulations and policies are in place and the courts enforce the orders that are issued.
2. Currency stability and arbitrage: Why does money matter so much when investing overseas?
When investing in Canada, it’s simple and easy since you are dealing with one currency (which is also your default investment currency). All income and capital gain are booked in CAD$. However, when investing overseas, currency fluctuations and potential arbitrage have to be considered. You do not want to be investing in a market where the currency has had a history of devaluation since that would be ‘investor suicide’.
A strong and stable currency such as USD or EUR is always appealing to most investors to limit risk and create a stable future cash flow.
In Panama, the entire economy is based on USD. Meaning all purchases, sales, expenses and rental income are also in USD. The bank account you open in Panama (we’ve mentioned the ease of the process later in this article) would also be in USD, allowing you to collect payments locally, pay expenses, and wire money internationally and also spend from your account using a debit card.
Most investors invest in the city they reside in. This makes sense, until it doesn’t financially add up. Of course, investing within a 1-2 hour drive from your current residence is convenient and very practical. All investors have used this technique of ‘convenience’ and hence all the major Canadian markets have been saturated with limited opportunities for upside investments.
Any investor considering investing outside their city or province or country, has to consider the travel time, visa-requirements, and ease of access. For example, travelling between Vancouver and Toronto is the same as travelling between central America and either of these cities. Inter-provincial investment in Canada and travel is not very convenient when comparing to international opportunities.
It takes approx. 5 and a half hours to fly to Panama City direct from most parts of Canada – almost as long as it takes to fly from West Coast to the East Coast of Canada. Canadians are visa exempt and can travel without any visa restrictions with direct flights, and connections through Colombia and USA. The airport in Panama City is approx. 15-20 minutes away from the core of the city.
From the point of view of a real estate investor, the ease of doing business can include:
• any language barriers
• ease of opening a bank account
• collecting payments
• regulatory hurdles in investing and liquidating assets
• expatriating funds from the specific jurisdiction
When investing in the city you reside, you are already in your own comfort zone. The most you may need is a property management person or company in case you cannot handle the property yourself. If you invest in another province in Canada, you will definitely need a property management person or company due to the geographic distance.
In Panama City, due to the large volume of expats, English is frequently spoken for business purposes. There are approx. 150,000 permanent expats living in Panama, and approx. up to 50,000 seasonal or part-time expats residing in the country. Many of the new developments are inhabited by expats from all over Europe, the UK and the USA.
Panamanian banks are even more flexible than Canadian banks to open a personal account. They even allow somebody to open a bank account without visiting – all done remotely. The bank accounts would be in USD currency and would allow you to receive inward international transfers, wire out funds to any other country, and also spend your money using an international debit card. There are no restrictions on moving money in or out of Panama.
This is an easy category. As long as you have access to a reliable, and trustworthy property management company or team you can remotely manage any condo unit or property anywhere in the world. If you do venture outside your current city of residence, this is a key factor. Unfortunately, most developers and properties in Canada do not offer this service as part of the in-house turnkey solution, which would have been ideal for investors, especially if you decide to invest in another city, province or even country.
In Panama City, all the top developers have in-house property management departments for each of their projects to help expats and investors manage everything turn-key and with a hands-off approach. It’s almost easier managing a property in Panama City then in your city in Toronto or Vancouver. It might sound too good to be true, but after you have started communicating with their on-site staff, you’ll realize how understaffed and expensive the same services are in Toronto or Vancouver or similar large metropolitan cities in North America.
This sounds a bit obvious and perhaps even taken for granted in many of the mature markets like Canada, but having free-hold title on property with an updated regional or national property registry is one of the basic foundations of real estate transactions in the modern world to protect real estate buyers and sellers. We are blessed with this in North America, Europe and most of the developed world. If one considers investing in an overseas market, the availability of such a property registry is paramount and considered a key factor in protecting the investor.
In Panama, free-hold property ownership is allowed for foreigners, and they have the same rights as a Panamanian. There is a centralized public property registry called the Panama’s Public Registry Office (Registro Público) for all property registrations. Title insurance is available for most properties in the city underwritten by US companies. Panama also operates a legally enforceable land registry system that ensures transparency and security in all property transactions. Under Panama’s Law 54 of 1998, foreign investors are granted the same property rights and legal protections as Panamanian citizens, with explicit safeguards against discriminatory treatment. All title transfers must be conducted through a licensed Panamanian attorney, providing an added layer of legal oversight. Once the transaction is complete, the property's title can be verified online through the country’s centralized public registry system, offering investors peace of mind and full visibility into their ownership status.
This can mean many things for many people. Maximizing gains while reducing taxes is every investor’s ultimate goal. Inside Canada we have many restrictions on short-term rent and specific sales tax and capital gain exemptions which may or may not affect the future gains from selling the property. We have touched on this topic earlier in this article with examples of the recent court rulings favoring CRA’s definition of Sales tax and capital gain exemptions if short-term rentals are being utilized to create income for a property. Checking such restrictions and dual taxation treaties is as important when investing in another jurisdiction outside Canada.
Panama is considered a tax-free jurisdiction for all income, capital gains, or estate inheritance generated outside the country. This makes it highly attractive for global investors looking to optimize their tax exposure.
For rental income earned within Panama, the country offers generous deductions. Investors can write off expenses such as:
• Property management fees
• Insurance
• Depreciation
• Interest payments
• Maintenance and condo fees
• Other related operational costs
After deductions, the tax structure is as follows:
• 0% tax on net rental income up to US$11,000 per year
• 15% tax on income between US$11,001 and US$50,000
For example, if your gross rental income is US$24,000 per year, and you do not claim any expenses, your tax bill would be US$1,950. However, in most real-world scenarios, your eligible deductions could significantly reduce or even eliminate any taxable amount.
Your property management company in Panama can guide you through this process, ensuring all applicable deductions are correctly claimed and helping you stay compliant while minimizing your tax liability.
In North America we have the MLS system for transparency of real estate prices and transactions. Not every country has a similar unified system. It is important to make sure you have access to such online platforms to check transactions, registered property prices, etc. Certain markets such as Cyprus and Greece lack this transparency which sometimes leads to inflated prices for investors who are not familiar with the local market.
In Panama the official government platform to access registered property information, including cadastral data, ownership details, and valuation, is SIIRE (Sistema de Información Integrado Registral y Estadístico - https://www.anati.gob.pa). It is managed by: ANATI – Autoridad Nacional de Administración de Tierras
(National Land Authority of Panama). They also have a mobile app where you can check the registered title, and the registered property value by the developer or seller before you decide to purchase.
At first glance, the idea of investing in another country might feel overwhelming—too many unknowns, too many potential pitfalls. But here’s the surprising truth: investing in countries like Panama can actually be simpler and more rewarding than buying in a neighboring Canadian province.
With fewer taxes, clearer regulations, and built-in support for foreign buyers, Panama removes many of the barriers that bog down investors in cities like Toronto or Vancouver. Even better? Many Panamanian developers go the extra mile to ease your decision-making process, offering to cover your flight and provide discounted hotel stays if you decide to move forward with a purchase during or within six months of your visit. It's a level of incentive and hospitality that Canadian developers rarely, if ever, offer.
In Panama, you're not just buying property—you’re investing in a system designed to welcome and empower you. And that peace of mind? It might just be the best return on investment of all.
Still Think International Investing is Risky? Maybe the Real Risk Is Staying Local.
This isn’t about chasing dreams. It’s about investing smarter.
Stop circling the same saturated markets and start looking where growth actually lives. And if Panama makes that leap feel easy, maybe it’s not a leap at all—just your next logical step.
Let’s talk without pressure. Contact us here and we’ll guide you: https://keap.page/fp463/real-estate-purchase.html
