Bustamante & Bustamante Cia. Ltda.
Can anyone (including foreigners) own and occupy real estate in your jurisdiction (including shares in property owning companies)? Are there any restrictions?
Nationals and foreigners can invest in real estate in Ecuador, since the Ecuadorian constitution grants foreign citizens the same rights as nationals. The right to private property is one of the rights guaranteed in the Constitution for both nationals and foreigners. The previously existing limitation for a foreigner to acquire real estate on the beach or border areas under the 2008 Constitution was repealed. Additionally, resident visas are automatically issued for foreigners who buy a property for $25,000 USD or more.
Are there restrictions on lending for the purchase of real estate by foreign companies? If so briefly give an outline?
The restrictions for obtaining a credit to buy real estate are not linked to the fact that it is a natural person or national or foreign legal entity, but rather to the requirements that a natural or legal person must comply with in order to access a credit, according to the legal regulations in Ecuador, such as: credit rating; justified income or revenues; financial collateral must be greater than the value of the credit, for example, if the collateral is the same property to be purchased, the financial institution may grant a credit around 80% of the asset’s value.
Buying
Please provide a short summary of the fees and costs (including tax) relating to buying real estate in your jurisdiction.
Municipal Taxes:
- Alcabala: 1% on the amount of the contract or cadastral appraisal.
- Income Tax: Up to 10% of profit obtained from selling the property.
- Improvements Contribution: Calculated based on the location of property.
- Provincial taxes: 1.1% on the cadastral valuation.
- National Taxes: Tax on land speculation was repealed, a new law shall be approved.
- Property Registration: With a maximum limit of US$ 500,00 plus 12% VAT.
- Notarial Expenses: From 0.15% of the Unified Basic Salary and up, based on property’s price plus 12% VAT
- Attorney Fees: Can be freely agreed.
- Miscellaneous expenses: copies, certificates and others.
Owning
Are there taxes applicable to owning real estate and can the burden of the taxes be passed to someone else (e.g. a tenant or an occupier - not being the owner)?
The owner, national or foreigner has the obligation to pay the real estate tax and the fees for the improvements that have been made and that can favourably affect the property. These taxes are not transferred to the tenant or occupier. Payment for basic services, if agreed upon in a document, including the lease, may be charged to the tenant or lessee.
Tax Breaks
Are there tax breaks or other incentives for foreigners to buy real estate in your jurisdiction? If so what are they?
There are not benefits or tax breaks for the fact of owning a property. However, if the person buys a property for a business in a depressed area, or to use it in private public alliances, or in projects that promote the economic and social development of the country, among others, they may qualify for specific benefits such as the reduction or exoneration of certain taxes, including income tax. These benefits are the same for nationals or foreigners and must be previously qualified by the competent authority.
How is the ownership of Real Estate evidenced in your jurisdiction?
With the public deed of sale-purchase, duly registered in the Real Estate Property Register.
Is it possible to keep the identity of owners of real estate confidential in your jurisdiction?
No. Any natural person or legal entity can obtain a certificate from the Real Estate Property Register on the owner of a certain property. The Real Estate Property Register is public.