Ecuador: Overview
In Depth
- Overview
- Price History
- Rental Yields
- Taxes and Costs
- Tax on Rent (Example)
- Buying Guide
- Landlord and Tenant
- Inheritance
- Living There
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- Country Statistics
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Ecuador’s fickle leadership
Left-leaning Rafael Correa was inaugurated in January 2007 as the newest addition to the growing list of presidents Ecuador has put in office. From 1996 to present, Ecuador already had seven presidents, one of whom only lasted three days. During the past decade, no president ever lasted to serve full term.
The smallest country in the rugged Andean highlands, Ecuador has an array of vibrant indigenous cultures, well-preserved colonial architecture, volcanic landscapes and dense rainforest.
There are no restrictions on foreign investment in real property in Ecuador, except within 50 km. from the country’s borders or coastline.
RENTAL YIELDS
Last Updated: Oct 14, 2009
Prices low, yields good
Apartments in Quito have yields of between 7.6% and 8.8%. Prices are attractive at well under US$1,000 per square metre, with the average being around US$900 per square metre. Houses are less expensive, at around US$690-US$790 per square metre.
TAXES AND COSTS
Last Updated: Aug 18, 2009
Rental income tax is high in Ecuador
Effective Tax Rate on Rental Income |
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| Monthly Income | US$1,500 | US$6,000 | US$12,000 |
| Tax Rate | 25% | 25% | 25% |
| Click here to see a worked example | |||
Source:
Disclaimer
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Rental Income: Non-resident foreigners are subject to a flat tax rate of 25% on gross income generated from within the country. It is withheld by the tenant.
Capital Gains: Capital gains of individuals on the occasional sale of real property are exempt from income tax.
Inheritance: Inheritances and gifts are taxed at progressive rates.
Residents: Residents are taxed on their worldwide income at progressive rates, from 5% to 55%.
BUYING GUIDE
Last Updated: Jul 17, 2007
Total transaction costs are moderate in Ecuador
The total roundtrip transactions costs, i.e., the cost of buying and selling a property, are at 10.25% - 14.25%. This includes the 4% to 6% agent's fee.
LANDLORD AND TENANT
Last Updated: May 30, 2005
Rent control, automatic contract renewal in Ecuador
Ecuador's rental market is pro-tenant.
Rent Control: The Registry of Rents in each city sets the maximum chargeable annual rent at 10% of the property value. Rents can normally be adjusted only after two years.
Tenant Security: The minimum contract is two years, which is automatically renewed if notice has been given. Settlement of disputes through the courts can take anything between 6 months to one year and a half.
ECONOMIC GROWTH
Last Updated: Jul 26, 2007
Small but turbulent Ecuador
It is no secret that Ecuador has been through several political troubles and crises. This perennial unrest pushes the economy through a roller coaster ride of booms and busts, as democratic regimes and dictatorships alternate.
Ecuador’s annual average GDP growth from 1996 to 2006 is 3.2%, falling only from 1998-1999 by 6.3%. Its biggest expansion was in 2004, registering an increase of 7.9% in its GDP. It registered a GDP growth rate of 4.4% from 2005-2006, with a GDP per capita of US$3,081 in 2006.
1999 was a bad year for Ecuador. It experienced a financial crisis, a banking sector collapse, and around 400% currency devaluation against the US dollar. Inflation jumped severely from 36.1% in 1998 to 96.1% in 2000. In an effort to salvage the situation, Ecuador adopted the US dollar in place of the Ecuador Sucre in 2000.
In 2006, political newcomer Rafael Correa won the elections, becoming the 8th president of Ecuador in 10 years. The leftist president is pushing for many radical political and economic reforms, like rewriting the constitution.
Earlier, Correa expressed the intention to default on the government’s payment of bonds due on February 15, and resolve into a 30-day grace period instead. This was despite the apparent ability of the government to pay its debt. Nevertheless, the government ordered to push through with the payment the day before the deadline.
RESIDENTIAL PROPERTY AROUND THE WORLD
Asia & Pacific
Looming housing slump in China
America & Caribbean
The great U.S. housing market crash
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| RESIDENTIAL PROPERTY FACTS | |
| Price (sq.m): $820 For a 120 sq. m. property, usually an apartment. | Rental Yield: 8.77% For a 120 sq. m. property, usually an apartment. |
| Rent/month: $719 For a 120 sq. m. property. | Income Tax: 25.00% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income. |
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Roundtrip Cost:
12.3%
The total cost of buying and then reselling an apartment. Includes: * all transaction taxes and charges: * lawyers' and notaries' fees * agents' fees Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000. |
Cap Gains Tax: 5.5% Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation. |
| Landlord & Tenant Law: Pro-Tenant Rating is based on a detailed study of each country’s law and practice. | |
JANUARY 2009
- Diverse Value in Ecuador - Nu Wire
DECEMBER 2008
MARCH 2008
APRIL 2007
- Ecuador leader celebrates ’win’ - BBC News
NOVEMBER 2006
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