Financial Preparation

• Determine your total investment budget (property + transaction costs + reserves)
• Establish a currency exchange strategy for Paraguayan Guaraní (PYG)
• Research USD/PYG exchange rates to identify favorable timing
• Set up international wire transfer capabilities with your home bank
• Consider options for opening a Paraguayan bank account (increasingly challenging for non-residents)
• Evaluate tax implications in both Paraguay and your home country
• Assess whether obtaining Paraguayan residency would be beneficial for tax purposes

Market Research

• Identify target cities based on investment goals (capital growth vs. rental yield)
• Research neighborhood-specific price trends and development plans
• Join online forums for Paraguay expatriates and investors
• Study property listings on platforms like InfoCasas and Clasificados.com.py
• Analyze infrastructure projects that may impact property values
• Research tenant demographics and rental demand in target areas
• Plan a preliminary market visit to evaluate areas firsthand

Professional Network Development

• Connect with bilingual attorneys specializing in Paraguayan real estate
• Identify reputable real estate agents with experience serving foreign clients
• Research property management companies in your target market
• Establish contact with currency exchange specialists
• Find a Paraguayan tax accountant familiar with foreign investor concerns
• Connect with residency consultants if considering the residency program
• Network with other foreign investors already active in Paraguay

Expert Tip: Consider using a buyer’s agent rather than working directly with listing agents in Paraguay. The real estate market is highly fragmented, with many properties not listed online. A good buyer’s agent will represent your interests exclusively, helping you locate off-market opportunities and negotiate more effectively than you could on your own.

Important Consideration: Paraguay offers a territorial tax system, meaning residents pay zero tax on foreign-sourced income. This makes Paraguay particularly attractive for investors who can establish residency while maintaining income sources outside the country. The flat 10% tax rate on locally generated income is also among the lowest in the region.

Banking Setup

• Bank Account Options:
  • Traditional Paraguayan banks: Increasingly difficult for non-residents without established local ties
  • International banks with Paraguay presence: Citibank has limited operations in Paraguay
  • Credit unions (Cooperativas): Often more accessible to foreigners than traditional banks
  • Foreign banking solutions: Many investors maintain accounts outside Paraguay and transfer funds as needed
• Typical Requirements for Bank Accounts:
  • Passport and second form of identification
  • Proof of legal status in Paraguay (visa or residency)
  • Local address verification
  • Tax ID number (RUC)
  • Reference letters from existing banks
  • Source of funds documentation
• Alternative Approach: Many foreign investors complete property transactions through their attorney’s client account, avoiding the need for a local bank account initially. The attorney can also structure regular transfers of rental income to international accounts.

Financing Options

The Paraguayan real estate market operates primarily on a cash basis for foreign investors:

1. Local Mortgage Financing:
   • Availability: Very limited for non-residents without established credit history in Paraguay
   • Terms: When available, typically short-term (5-10 years) with high interest rates (10-15%)
   • Requirements: Substantial down payment (40-50%), local income verification, property insurance
   • Practical Reality: Most foreign investors use cash rather than seeking local financing
2. Developer Financing:
   • Some developers offer payment plans for new constructions
   • Typically requires 30-50% down payment
   • Terms usually range from 6 months to 3 years
   • Interest rates are negotiable but generally higher than in North America
3. Home Country Financing:
   • Refinancing existing properties in North America
   • Home equity lines of credit (HELOCs)
   • Personal loans or investment credit lines
   • Often most cost-effective option for foreign investors
4. Private Lending:
   • Arrangements with private individuals or family offices
   • Flexibility in terms and structure
   • Requires careful legal documentation
   • Less common but growing in popularity

Currency Management

The Paraguayan Guaraní (PYG) can fluctuate against major currencies, creating both risks and opportunities:

• Exchange Rate Considerations:
  • Monitor USD/PYG and CAD/PYG exchange rates to identify favorable windows for transfers
  • Be aware that the official exchange rate may differ from what banks or exchange services offer
  • Many property transactions are actually conducted in USD despite being denominated in PYG
• Currency Services:
  • Specialized services like Wise (formerly TransferWise) often offer better rates than banks
  • Local currency exchanges in Paraguay (cambios) provide an alternative for in-person transactions
  • Wire transfers typically take 1-3 business days to complete
• Income Repatriation:
  • Paraguay has no currency controls restricting outflows
  • Large transfers may require documentation of source of funds
  • Regular smaller transfers often face less scrutiny than large lump sums
  • Maintain detailed records for tax purposes in your home country

It’s important to understand that while property may be listed in USD, some payments and expenses will need to be handled in Paraguayan Guaraní, making currency management an ongoing consideration for foreign investors.

Property Search Resources

• Online Property Portals:
  • InfoCasas.com.py – Leading property portal in Paraguay
  • Clasipar.Paraguay.com – Popular classified site with property listings
  • Mubawab.py – Growing property marketplace
  • Century 21 Global – International broker with Paraguay presence
• Real Estate Agents:
  • Local independent agencies (typically focused on specific areas)
  • International firms with Paraguay offices (limited presence)
  • No formal MLS system exists, so agents only show their own listings
  • Most agents represent sellers, not buyers (dual agency is common)
• Direct Search Methods:
  • Driving through target neighborhoods looking for “For Sale” signs
  • Networking with local expatriate communities
  • Contacting property developers directly for new constructions
  • Working with a dedicated buyer’s agent who can access off-market properties
• Property Auctions:
  • Bank-foreclosed properties occasionally available at discount
  • Government auctions for tax-delinquent properties
  • Usually requires working with local attorney to participate
  • Higher risk but potential for better value

Property Viewing Trip Planning

For overseas investors, an efficient property viewing trip is essential:

1. Pre-Trip Research:
   • Identify 10-15 potential properties before arrival
   • Schedule viewings in advance with agents
   • Research neighborhoods thoroughly online
   • Arrange meetings with attorneys and other professionals
   • Consider timing your visit during Paraguay’s temperate months (April-October)
2. Trip Logistics:
   • Plan for at least 7-10 days in Paraguay
   • Base yourself in a central location (Asunción for most investors)
   • Arrange local transportation (taxis or rental car)
   • Hire an interpreter if you don’t speak Spanish
   • Leave time between viewings to explore neighborhoods
3. During Viewings:
   • Take detailed photos and videos
   • Document property condition issues
   • Ask about utility costs and service reliability
   • Inquire about neighborhood safety and amenities
   • Verify property boundaries match documentation
   • Check mobile signal strength and internet availability
4. Local Expertise:
   • Meet with multiple real estate professionals
   • Consult with a local attorney before making offers
   • Connect with other foreign investors in the area
   • Visit local municipal offices for development plans

Property Evaluation Criteria

Assess potential investments using these key criteria:

• Location Factors:
  • Proximity to employment centers and commercial areas
  • Transportation access and traffic patterns
  • Neighborhood safety and security measures
  • Access to amenities (shopping, dining, parks)
  • Future development plans for the area
  • Flood risk and environmental considerations
• Property Characteristics:
  • Construction quality and materials used
  • Age and condition of major systems (electrical, plumbing)
  • Layout functionality and space efficiency
  • Parking availability and security features
  • Orientation and natural light exposure
  • Potential for value-adding improvements
• Rental Potential:
  • Current rental rates for similar properties
  • Occupancy rates in the area
  • Tenant profile (expats, students, professionals)
  • Seasonal fluctuations in rental demand
  • Competition from other rental properties
  • Furnished vs. unfurnished rental options
• Financial Considerations:
  • Price per square meter compared to similar properties
  • Estimated maintenance and repair costs
  • Property tax obligations (relatively low in Paraguay)
  • Potential for appreciation based on area development
  • Liquidity and resale potential
  • Total return calculation (cash flow + appreciation)

Expert Tip: Many property listings in Paraguay are significantly overpriced, with sellers starting at aspirational figures and expecting negotiation. In most areas (especially outside Asunción), it’s reasonable to negotiate 10-20% below asking price. Properties can sit on the market for months or years, giving patient buyers significant leverage. Having cash available and the ability to close quickly can strengthen your negotiating position substantially.

Legal Due Diligence

• ✓
  Title Verification: Request a title report (Certificado de Condiciones de Dominio) from the Property Registry
• ✓
  Encumbrance Check: Verify no liens, mortgages, or claims against the property
• ✓
  Owner Verification: Confirm current owner’s identity matches title documents
• ✓
  Property Tax Status: Check for any unpaid property taxes or municipal fees
• ✓
  Boundary Verification: Compare cadastral documents with physical boundaries
• ✓
  Zoning Compliance: Verify property use conforms with local zoning regulations
• ✓
  Building Permits: Check that all structures have proper permits and approvals
• ✓
  Historical Property Transfers: Review chain of title going back at least 20 years

Physical Due Diligence

• ✓
  Property Inspection: Hire a qualified building inspector to assess structural integrity
• ✓
  Systems Review: Evaluate electrical, plumbing, and mechanical systems
• ✓
  Water Quality Testing: Particularly important in rural areas or older buildings
• ✓
  Flooding Risk Assessment: Research historical flooding in the area
• ✓
  Environmental Concerns: Check for contamination or environmental hazards
• ✓
  Internet & Utilities: Verify reliable access to electricity, water, and internet
• ✓
  Access & Easements: Confirm legal access to the property and any relevant easements

Financial Due Diligence

• ✓
  Comparative Market Analysis: Verify fair pricing through comparable properties
• ✓
  Rental Market Analysis: Research actual rental rates and occupancy levels
• ✓
  Expense Verification: Obtain utility bills, tax statements, and maintenance records
• ✓
  Property Management Quotes: Get estimates from multiple management companies
• ✓
  Capital Expenditure Planning: Budget for necessary repairs and improvements
• ✓
  Tax Projections: Calculate property and income tax obligations
• ✓
  ROI Analysis: Develop realistic cash flow projections and return scenarios

Expert Tip: Land title issues are the most significant risk in Paraguayan real estate investments. Paraguay has a complex land title history with overlapping claims dating back decades. Never rely solely on the word of the seller or agent regarding title clarity. Hire a specialized real estate attorney to conduct a comprehensive title search and resolve any issues before proceeding with the purchase. This additional expense is minimal compared to the potential losses from title disputes.

Offer and Negotiation

1. Initial Offer: Typically made verbally through your agent or attorney
2. Negotiation: Back-and-forth on price, terms, and included items
3. Agreement in Principle: Verbal acceptance of terms (not legally binding)
4. Reservation Agreement: Optional written agreement with small deposit to take property off market

In Paraguay, offers are generally not formalized with written contracts until later in the process. The initial negotiation phase is fluid, and either party can back out without legal consequences. Having a skilled negotiator who understands local market dynamics is particularly valuable during this phase.

Legal Process

1. Attorney Engagement: Hire a specialized real estate attorney to handle the transaction
2. Due Diligence: Attorney conducts title search and legal verification
3. Purchase Agreement: “Promesa de Compraventa” or purchase promise is drafted and signed
4. Initial Deposit: Typically 10-30% of purchase price held in escrow account
5. Document Preparation: Attorney prepares final transfer deed (Escritura Pública)
6. Notarization: Signing of deed before a Public Notary (Escribano Público)
7. Payment: Balance of purchase price paid via wire transfer or certified funds
8. Property Registration: Transfer deed submitted to Property Registry

The legal process in Paraguay typically takes 30-60 days from agreement to completion, assuming no title issues arise. Working with an experienced attorney is essential, as they coordinate with the notary, handle document preparation, and ensure proper registration with authorities.

Transaction Costs

Budget for these typical transaction expenses in Paraguay:

Note: Costs are approximate and may vary based on property value, location, and specific circumstances.

Expert Tip: While the official currency of Paraguay is the Guaraní, many real estate transactions, especially involving foreign buyers, are conducted in US dollars. Having funds available in both currencies is advisable, as certain costs (like government fees) must be paid in Guaraní while the property itself may be priced in dollars. Be prepared for potential currency conversion costs by building a buffer into your budget.

Administrative Tasks

• ✓
  Property Registration: Verify your title is properly registered with the Public Registry
• ✓
  Utility Transfers: Transfer electricity, water, and other services to your name
• ✓
  Municipal Registration: Register with local municipal authorities for property taxes
• ✓
  Insurance Coverage: Obtain property insurance appropriate for Paraguay
• ✓
  Property Management Setup: Establish relationship with local property manager if needed
• ✓
  Banking Arrangements: Set up accounts for property-related expenses and income
• ✓
  Tax Registration: Register with tax authorities if generating rental income

Regulatory Compliance

Rental properties in Paraguay must comply with various regulations:

• Property Condition Standards:
  • Basic habitability requirements for residential rentals
  • Functional plumbing, electrical, and sanitation systems
  • Structural safety standards
  • Fire safety measures in multi-unit buildings
• Rental Agreement Requirements:
  • Written contract required for longer-term rentals
  • Contracts must specify duration, rent amount, and payment terms
  • Security deposit limitations (typically 1-2 months’ rent)
  • Inclusion of property inventory and condition report
• Tax Compliance:
  • Registration with tax authorities if generating rental income
  • Value Added Tax (IVA) at 10% on rental income (exemptions may apply)
  • Annual property tax payments to municipal authorities
  • Income tax reporting for rental income
• Commercial Property Requirements:
  • Additional licensing for certain business uses
  • Health and safety inspections for public-facing businesses
  • Accessibility requirements for commercial spaces
  • Zoning compliance with municipal regulations

While Paraguay has fewer rental regulations than many developed countries, compliance is still important to avoid potential fines or legal complications, particularly in formal rental markets catering to expatriates and corporate clients.

Record Keeping

Maintain comprehensive records for tax and legal purposes:

• Property Documents:
  • Original title deed (Escritura Pública) and property registration
  • Property tax receipts and payment records
  • Insurance policies and claims history
  • Utility accounts and payment history
  • Maintenance records and improvement documentation
• Financial Records:
  • Purchase transaction documentation and receipts
  • Rental income statements and tenant payment records
  • Property-related expense receipts
  • Annual tax filings and payments
  • Bank statements for property-related accounts
• Tenant Records (if applicable):
  • Tenant applications and screening documentation
  • Signed lease agreements
  • Security deposit records
  • Property inspection reports (before/after tenancy)
  • Maintenance request records and resolutions

For foreign investors, maintaining duplicate records in both Paraguay and your home country is advisable. Digital copies of all important documents should be securely stored with backups in multiple locations.

Expert Tip: Consider establishing a formal power of attorney (Poder General) with your Paraguayan attorney or property manager. This legal document allows your designated representative to handle various matters related to your property in your absence, from dealing with utility companies to managing tax matters and even representing you in legal proceedings if necessary. This is particularly valuable for investors who cannot frequently visit Paraguay.

Paraguay Tax Obligations

• Property Transfer Tax:
  • 1.5% of the property value at time of purchase
  • Paid by the buyer during the property registration process
  • Collected by the notary and remitted to tax authorities
• Annual Property Tax (Impuesto Inmobiliario):
  • 0.5-1% of the fiscal property value (typically below market value)
  • Paid to the municipal government annually
  • Modest compared to many North American jurisdictions
• Income Tax on Rental Income:
  • For non-residents: 15% withholding tax on 50% of the gross rent (effective 7.5%)
  • For Paraguayan residents: 10% personal income tax (above minimum threshold)
  • Tax residents benefit from Paraguay’s territorial taxation system
• Value Added Tax (IVA):
  • 10% on professional services related to property
  • Leasing property also subject to reduced 5% VAT
  • Some exemptions apply for residential properties
• Capital Gains Tax:
  • Gains from property sales are subject to standard income tax rates
  • For individuals: 10% on 50% of the gain (effective 5%)
  • For companies: 10% corporate tax on the full gain

Residency & Tax Status

Paraguay offers significant tax advantages for residents:

• Territorial Taxation System: Paraguay only taxes income generated within its borders, offering 0% tax on foreign-sourced income
• Tax Residency Requirements:
  • Officially: 120+ days of physical presence in Paraguay during the calendar year
  • Practically: Once you have your Paraguayan ID card (Cédula), you’re considered a tax resident
• Residency Process:
  • Temporary residency first (2 years, minimal documentation required)
  • Permanent residency after temporary period (minimal physical presence required)
  • Citizenship possible after 3 years of permanent residency
• Tax Documentation:
  • Tax ID (RUC) registration for resident taxpayers
  • Annual income tax declaration if generating local income
  • Tax residency certificate to prove status to other countries

For many investors, the primary motivation for Paraguayan property investment is to establish a foothold for residency and access to the country’s advantageous tax system. With minimal physical presence requirements, Paraguay offers one of the world’s most accessible tax residency programs.

Home Country Tax Implications

Both the U.S. and Canada have specific criteria for determining tax residency status. Establishing Paraguayan tax residency does not automatically terminate tax obligations in your home country. Consult with cross-border tax professionals who understand both systems to develop a compliant strategy that maximizes the benefits of Paraguay’s territorial tax system.

Expert Tip: Paraguay’s territorial tax system is a powerful tool for international tax planning, but it must be utilized correctly. Simply owning property or having residency in Paraguay is not sufficient to escape tax obligations in your home country. Proper planning requires careful structuring of income sources, consideration of tax treaties, and potentially establishing true tax residency with sufficient ties to Paraguay. Always work with qualified international tax professionals to ensure compliance with all applicable laws.

Selecting a Property Manager

Evaluate potential property managers using these criteria:

• Experience with Foreign Investors:
  • Track record working with non-resident property owners
  • Experience with international transfers and reporting
  • Bilingual capabilities (Spanish/English)
  • Understanding of foreign investors’ unique needs
• Professional Qualifications:
  • Licensed real estate professionals
  • Membership in professional associations
  • References from other foreign clients
  • Transparent fee structure
• Service Capabilities:
  • 24/7 emergency response protocols
  • Established maintenance contractor network
  • Digital reporting and communication systems
  • Regular property inspection schedule
  • Tenant screening process
• Management Technology:
  • Online owner portal for financial reporting
  • Digital document storage and access
  • Modern payment processing capabilities
  • Property marketing platforms

Management Contract Essentials

Ensure your property management agreement includes these key elements:

• Scope of Services: Detailed description of what is included and what incurs additional fees
• Fee Structure: Clear explanation of all management fees, commissions, and charges
• Contract Term: Duration of the agreement and termination conditions
• Reporting Frequency: Schedule for financial statements and property condition reports
• Maintenance Authorization: Spending limits that require owner approval
• Tenant Selection Criteria: Standards for approving prospective tenants
• Rent Collection Procedures: Methods, timing, and handling of late payments
• Security Deposit Handling: How deposits are held and disbursement process
• Emergency Protocols: Procedures for urgent situations
• Insurance Requirements: Coverage expectations and liability provisions
• Legal Compliance: Responsibility for regulatory adherence
• Communication Methods: How and when managers will contact owners

The property management industry in Paraguay is less regulated than in North America, making careful contract review essential. Have your attorney review any management agreement before signing to ensure your interests are protected.

Expert Tip: Landlord-tenant disputes in Paraguay can be challenging to resolve through official channels, as court proceedings are slow and often unpredictable. A quality property manager earns their fee primarily through effective tenant screening and proactive problem resolution. The best managers maintain a database of reliable tenants (particularly expatriates and corporate clients) and have well-established eviction procedures for the rare occasions when problems escalate. Ask specifically about their tenant screening process and how they handle non-payment situations.

Exit Options

Sale Process

When selling your Paraguayan property:

1. Pre-Sale Preparation:
   • Address any maintenance issues and improve curb appeal
   • Gather all relevant documentation (title, tax records, etc.)
   • Consider professional photography and property staging
   • Determine optimal pricing through comparative market analysis
2. Marketing Strategy:
   • Engage reputable local real estate agents
   • List on both Paraguayan and international platforms
   • Target marketing to likely buyer segments (expats, investors)
   • Leverage social media and expatriate networks
3. Negotiation Process:
   • Expect significant negotiation on asking price
   • Be prepared for longer sales timeline than in North America
   • Consider offering seller financing to attract more buyers
   • Have attorney review all offers and terms
4. Legal Transfer:
   • Follow similar process to original purchase
   • Prepare transfer deed (Escritura Pública) with notary
   • Ensure buyer pays transfer tax
   • Complete property registration transfer
5. Tax Considerations:
   • File capital gains tax declaration within 60 days
   • Plan for currency repatriation
   • Report sale on home country tax returns
   • Maintain documentation for tax authorities

The selling process in Paraguay typically takes 3-6 months from listing to completion, assuming the property is priced correctly. Having all documentation in order and working with experienced professionals can help minimize delays.

Market Exit Timing Considerations

Several factors should influence your exit timing decision:

• Economic Cycles: Paraguay’s real estate market tends to follow more gradual cycles than volatile markets, but timing exits during periods of economic strength can maximize returns
• Currency Exchange Rates: Monitor PYG/USD or PYG/CAD trends; selling when your home currency is weaker against the Guaraní can significantly enhance returns when converting proceeds
• Infrastructure Developments: Major infrastructure projects often increase nearby property values upon completion; timing sales to coincide with such completions can maximize capital appreciation
• Political Considerations: Presidential elections (every 5 years) often create temporary market uncertainty; selling 1-2 years into a stable administration typically provides more favorable conditions
• Tax Residency Impacts: Consider how property sale may affect residency status or tax obligations in both Paraguay and your home country
• Local Market Seasonality: The most active buying season typically runs from March through November, with slower activity during Paraguay’s summer (December-February)
• Regional Development: Monitor neighborhood-specific growth patterns and development plans that could impact property values

The Paraguayan real estate market is less liquid than those in major North American cities, making strategic exit planning particularly important. Begin preparations at least 6-12 months before your desired sale date to maximize your chances of achieving optimal returns.

Expert Tip: If you’ve established Paraguay residency through your property investment, remember that selling your property doesn’t automatically terminate your residency status. You can maintain your residency even after selling, as long as you continue to visit Paraguay once every three years. This flexibility allows you to capture property appreciation while retaining the tax and lifestyle benefits of Paraguayan residency for years to come.