• About Us
  • Contact Us
  • Privacy Policy
  • Terms
  • Unsubscribe
No Result
View All Result
Live and Invest Overseas
FREE REPORT
BEST PLACES TO RETIRE
*No spam: We will NEVER give your email address to anyone else.
  • HOME
  • COUNTRIES
    • Top Destinations
      • Portugal
      • Panama
      • Belize
      • France
      • Colombia
      • Dominican Republic
      • Thailand
      • Mexico
      • Spain
      • Argentina
    • Browse All Countries
    • Best For
      • Retire Overseas Index
      • Health Care
      • Cost of Living
      • Investing in Real Estate
      • Editor’s Picks For Retirement
      • Establishing Residency
      • Starting an Online Business
      • Single Women
      • Playing Golf
  • BUDGETS
    • Super Cheap ($)
      • Cuenca, Ecuador
      • Chiang Mai, Thailand
      • The Philippines
      • Las Tablas, Panama
      • Granada, Nicaragua
    • Cheap ($$)
      • Algarve, Portugal
      • Medellin, Colombia
      • Boquete, Panama
      • Carcassone, France
      • Buenos Aires, Argentina
    • Affordable ($$$)
      • Abruzzo, Italy
      • Barcelona, Spain
      • Las Terrenas, Dominican Republic
      • Puerto Vallarta, Mexico
      • Costa de Oro, Uruguay
    • Luxury On A Budget ($$$$)
      • Ambergris Caye, Belize
      • Paris, France
      • Panama City Beach Area
  • Real Estate
  • ARCHIVES
    • Living & Retiring Overseas
    • Raising A Family Abroad
    • Foreign Residency & Citizenship
    • Offshore Diversification
    • Our Latest On Coronavirus ⚠️
  • Making Money
    • International Real Estate
    • Banking
    • Employment
    • Investing
  • CONFERENCES
  • BOOKSTORE
Live and Invest Overseas
  • HOME
  • COUNTRIES
    • Top Destinations
      • Portugal
      • Panama
      • Belize
      • France
      • Colombia
      • Dominican Republic
      • Thailand
      • Mexico
      • Spain
      • Argentina
    • Browse All Countries
    • Best For
      • Retire Overseas Index
      • Health Care
      • Cost of Living
      • Investing in Real Estate
      • Editor’s Picks For Retirement
      • Establishing Residency
      • Starting an Online Business
      • Single Women
      • Playing Golf
  • BUDGETS
    • Super Cheap ($)
      • Cuenca, Ecuador
      • Chiang Mai, Thailand
      • The Philippines
      • Las Tablas, Panama
      • Granada, Nicaragua
    • Cheap ($$)
      • Algarve, Portugal
      • Medellin, Colombia
      • Boquete, Panama
      • Carcassone, France
      • Buenos Aires, Argentina
    • Affordable ($$$)
      • Abruzzo, Italy
      • Barcelona, Spain
      • Las Terrenas, Dominican Republic
      • Puerto Vallarta, Mexico
      • Costa de Oro, Uruguay
    • Luxury On A Budget ($$$$)
      • Ambergris Caye, Belize
      • Paris, France
      • Panama City Beach Area
  • Real Estate
  • ARCHIVES
    • Living & Retiring Overseas
    • Raising A Family Abroad
    • Foreign Residency & Citizenship
    • Offshore Diversification
    • Our Latest On Coronavirus ⚠️
  • Making Money
    • International Real Estate
    • Banking
    • Employment
    • Investing
  • CONFERENCES
  • BOOKSTORE
No Result
View All Result
Live and Invest Overseas
No Result
View All Result
Home Countries Ecuador

Property Purchase Process In Ecuador

Lief Simon by Lief Simon
May 30, 2014
in Ecuador, Real Estate
0
Foreign Property Ownership In Ecuador
223
SHARES
3.2k
VIEWS
Share on FacebookShare on Twitter

Don’t Be The Last Guy Buying In Ecuador

Years ago I bought a lot in a small development on Santa Cruz Island in the Galapagos. This wasn’t a commonplace real estate purchase. Only 3% of the land in the Galapagos can be owned privately. The rest is national park or preserve. And that 3% that can be owned by individuals comes with restrictions. I had to partner with a local Galapagan (that the developer found for me).

I’m in the process now of selling that lot, and the process is reminding me of some of the quirks associated with buying property in Ecuador.

When I bought my Galapagos lot, others I knew were buying into the same development. One other buyer wrote to ask about the price listed in the title document she had been sent to sign. Lots were selling for US$11,000, but the title in this case was being registered with a price of US$500. The buyer was concerned something was wrong with the deal.

No, nothing was wrong. Big differences between sales prices and title registration prices are the norm in Ecuador. Transfer and capital gains taxes are based on the registered price. Therefore, for decades, sellers have under-recorded sales prices; they register prices as low as they can get away with, as evidenced by the registered price of US$500 for a US$11,000 piece of land.

Ecuador isn’t the only country where this happens, but it is the only country I know where the process continues as aggressively as it does. In most other countries where this practice has been common, authorities have or are now in the process of cracking down. This creates a risk for the buyer in any of these countries. You don’t want to be the last guy buying before the government cracks down hard. If that happens, when you eventually sell, you’ll have no choice but to record the actual full sales price on the registration, meaning you could end up paying capital gains taxes on maybe way more gains than you’ve actually realized.

I’ve always recommended against going along with this practice, because I’ve always figured it was a matter of time before countries where it’s practiced decided to put an end to it. This has not happened in Ecuador yet. Still, I offer the same advice:

If you buy property in this country, insist on pushing up the registered value up as much as possible. You want the registered price to be as close to the actual sales price as you can manage without killing the deal. Remember, the higher the price you register, the greater the capital gains tax burden for the seller…thus the conflict. Depending on how long you intend to hold your purchase, it could even be worth offering to pay some of the seller’s capital gains tax for him.

I did this when purchasing my apartment in Medellin, Colombia. It’s been common practice in Colombia, too, to under-register property sales prices. In Colombia, the practice isn’t as aggressive as in Ecuador, but in Colombia authorities have had enough and are actively working to put a halt to it. I realized the winds were changing (thanks to my attorney), so, when I made my purchase four years ago, I negotiated with the seller to be able to register very close to the full sales price.

Back to my lot in the Galapagos. I’ve owned this for several years but have never paid the annual property tax. This wasn’t a pre-meditated plan. I just was never able to figure out how to pay. Probably there is a municipality office on Santa Cruz where the bills are paid in person…but I’ve never been to see my lot.

So, when a buyer presented himself, I included the back taxes in the sales price…along with all other costs associated with the purchase. In other words, I’m receiving a net price and everything else is for the buyer’s account.

In Ecuador, everything is negotiable.

Lief Simon

Continue reading: The Rising Cost Of Living In Cuenca, Ecuador

Tags: Investing In EcuadorpropertyProperty In EcuadorProperty In The Galapagos Islands
Share89Tweet56
Previous Post

Buying Property In Ibarra, Ecuador

Next Post

The Rising Cost Of Living In Cuenca, Ecuador

Lief Simon

Lief Simon

Lief Simon has lived and worked on five continents and traveled to more than 60 countries. In his long career as a global property investor, Lief has also managed multimillion-dollar portfolios of rental properties, for others and for himself. He offers advice on international diversification in his twice-weekly Offshore Living Letter and monthly Simon Letter dispatches.

Related Posts

Porto, Portugal
Argentina

Where (And Why) Should You Buy Property Overseas In 2022?

by Live And Invest Overseas
June 15, 2022
0

Most people think that purchasing real estate overseas is about having a second home to go to when you want...

Read more
Quaint colorful houses of the Alsatian city of Colmar, France

How To Tell If You’ve Found Your Ideal Home Overseas

June 14, 2022
Serene street in Colonial Zone of Santo Domingo, Dominican Republic

8 Things You Need To Know About Bank Financing Overseas

June 13, 2022
View of Ponta Verde in Maceio, Alagoas, Northeast of Brazil

Investing In International Real Estate

June 12, 2022
General view of apartments for rent in Portimao, Algarve, Portugal

The Best Property Deals To Expand Your Portfolio Offshore

June 10, 2022
An image of Medellin, Colombia to the left and Cuenca, Ecuador to the right

Expat Life In Medellín, Colombia Vs. Cuenca, Ecuador

June 8, 2022
Copacabana beach in Rio de Janeiro, Brazil.

The Top Countries With Favorable Exchange Rates

June 7, 2022
Next Post
Cost of living in Cuenca, Ecuador

The Rising Cost Of Living In Cuenca, Ecuador

Start Your New Life Today, Overseas

A world full of fun, adventure, and profit awaits! Sign up for our free daily e-letter, Overseas Opportunity Letter, and we’ll send you a FREE report on the 10 Best Places To Retire In Style Overseas Today.







LIOS Resources


  • New To LIOS
  • Ask An Expert
  • Media Center
  • Contact Us
  • FAQs

Quick Links


  • Best Places To Live
  • Best Places To Retire
  • Finding A Job Overseas
  • Real Estate

Sign up for our free daily e-letter, Overseas Opportunity Letter, and get your FREE report: The 10 Best Places To Retire Overseas In 2022

  • About Us
  • Contact Us
  • Privacy Policy
  • Terms
  • Unsubscribe

© 2008-2021 - Live and Invest Overseas - All Rights Reserved.

No Result
View All Result
  • Home
  • Countries
  • Budgets
  • Archives
  • News
  • Events
  • Bookstore
  • Newsletters
  • About Us
  • Members Area
  • Contact Us

© 2008-2021 - Live and Invest Overseas - All Rights Reserved.

Sign up for FREE and learn how to live the good life on a modest budget, find bargain property, and more. Plus, check out our free report on the 10 BEST PLACES TO RETIRE.

RETIRE OVERSEAS AND LIVE LIKE ROYALTY

The World’s Best Places To Be In 2022?

Discover Them Here…