also establishes the principle of private property as an important
development factor, and many types of requisition and seizure by the government
equal land and property ownership rights in Ecuador. There is no
foreigner-specific limitation for the ownership of land in Ecuador, be
this beachfront or other.
There is also
a tax advantage for U.S. citizens who live and earn in Ecuador. U.S. citizens
or resident aliens of the United States who must live abroad because of
their employment can exclude up to US$80,000 of foreign earned salary from
their U.S. income tax.
earned income is income received for services performed in a foreign
country during a period when a person’s tax home is in a foreign country
and they meet either a bona fide residence test or the physical presence
test. You can read all the details at http://www.irs.gov/faqs/
that is exempted from U.S. taxes would then be subject to Ecuador’s flat
rate of 25%. But you won’t be paying things like FICA, and there are plenty
of tax exemptions and allowances in Ecuador.
Is Easy And Affordable
Ecuador is incredibly inexpensive (a brand new 800-square foot condominium
in a good part of Quito can cost as little as US$39,000) and it is very
easy to stay there.
can enter Ecuador without a visa and stay for up to 90 days per year.
This visitor’s permit is easy to extend. If you have a business in Ecuador,
you can stay almost indefinitely without official residency. One friend
I know has lived in Quito for ten years and never applied for residency.
Instead, he stays as an agent of his business.
There are several
ways to obtain a resident visa if you choose. Most of them require proof
of making an investment in Ecuador. That investment can be the purchase
of real estate, the incorporation of a company, the purchase of shares,
or even a fixed-term deposit in a local bank.
residency is especially easy to obtain because a fluke in the law happened
when the country dollarized.
the minimum investment required the equivalent of US$50,000 in Ecuadorian
sucre. But when this law was written, a few hundred sucre was worth a dollar.
Then the sucre fell so dramatically that $US1 would buy over 25,000 sucre.
dollarized, the lowest exchange rate was used which made the minimum investment
requirement for residency a paltry US$1,400. Each family member required
only an added another US$400. In February 2005, Ecuador increased this
amount to US$25,000. But that’s still low. Simply buying a very inexpensive
house fulfills one’s residency requirements.
If a person
has a university degree and does not want to invest in the country at all,
it is also possible, in some cases, to obtain a resident visa.
Here are just
some of the advantages to living in Ecuador:
and dental costs are low. One friend who moved to Quito recently confirmed
that medical and dental costs are really low and service is good. He wrote:
the dental costs are really low here. My teeth cleaning was US$35 and my
wife’s crown US$350...In the States my 6-month cleanings would cost US$90
to US$95 and a crown would cost US$1,500.”
costs are low, too. Merri and I learned this the hard way when Merri
fell and dislocated her elbow. A morning in the emergency room at
Hospital, a specialist to reset the dislocation, blood tests, two doctors,
six x-rays, and the cast came to a grand total of US$182!
ranges from native markets to super markets. A lot of convenience foods
such as cake mixes and frozen meals are still missing, but since cooks
only cost around US$100 a month this is not a problem. You’ll find numerous
U.S.-style shopping arcades with plenty of American goods, plus all the
imports from other nations. The Chinese have invaded Ecuador so their inexpensive
clothing, shoes and other consumer goodies are all there. Plus, all the
American sins—Pizza Hut, Burger King, McDonald’s—are well established in
Ecuador’s major cities.
help is cheap! My wife, Merri, and I do not drive in Ecuador. Road
signs are non-existent. On the plus side, we are told that auto accidents
are resolved pleasantly. Still, we don’t want to be able to write about
this from experience, so we don’t bother.
hire a driver. Drivers are inexpensive and this allows us to relax and
enjoy instead of worrying about the traffic.
help is very affordable. On the rare cold nights in Ecuador, there
is nothing like having helpers come in and build eucalyptus fires in every
fireplace throughout the house!
find these differences delightful. You can have your cook, driver and cake,
even though the cake mix may not be available in Super Maxi. Since the
maid will take care of getting the foodstuffs anyway, who cares?
Has Its Advantages
For those who
want to go one step further and actually become an Ecuadorian citizen,
this is easy as well. Any foreigner who has been a resident for three years
may acquire an Ecuadorian passport (and nationality) after
due process. Ecuador allows its citizens to be dual nationals, provided
the country of origin (such as the U.S. and Britain) permits this.
residents of Ecuador get an Ecuadorian ID card and have local rates
at hotels, national parks, universities, etc. Foreigners with a resident
visa may bring their household goods free of tariffs after due process.
This process, however, is a bit cumbersome and often makes doing it not
entirely worth it.
Of Potential Downsides
There are two
downsides to getting the Ecuadorian residency permit. Once you obtain a
resident visa to maintain this status, you cannot leave the country for
over 90 days per year during the first three years of residence.
permit brings you one step closer to qualifying to paying Ecuador’s 25%
flat tax. But, as I have mentioned before, there are plenty of exemptions
that could reduce your tax burden.
Like any extensive
legal process, you should use an attorney experienced in such matters both
in the country of current residency and another in Ecuador. Our Ecuador
attorney, Dr. Andres Cordova, is well versed in residency and tax law.
His e-mail address is firstname.lastname@example.org.
All in all,
I believe Ecuador is a slice of paradise on the cheap. If you can put up
with people marching in the streets and banging on pots every once in a
while to “throw the bums out,” you can find real estate bargains
and a first-rate quality of life.
In Quito Real Estate
If you want
to establish residency in Ecuador, you’ll want to buy real estate. And
buying real estate in any foreign country can be challenging. For those
who take the time to shop around, there are great bargains in Ecuador.
Here are a few tips…
price confusion. Prices are far less logical than in the U.S. A friend
once told me he bought a whole mountain for US$10,000. I asked how and
he said, “I met an Ecuadorian who owned a mountain and needed US$10,000.”
In other cases,
two identical properties right next to one another will have totally different
prices. Only the Ecuadorian mind will be able to understand why.
are easy-to-find listings in English on the Internet (see http://www.mantarealestate.com/pages/471699/index.htm).
Shoppers who have time and a bit of Spanish will find much lower prices,
if they spend time in Ecuador hunting down bargains.
see luxury apartments selling in Salinas - the most Western coastal
resort - for US$97,500 (level 4) to US$135,000. And a recent perusal of
internet home listings found a 2,900-square foot house with 4 bedrooms,
2 bathrooms, maid’s quarters, a fireplace, and mountain view for US$140,000.
Try and find THAT in New Jersey.
can also decide to build instead of buy. Keep in mind that the underpinnings
of the real estate market are construction costs which still run in the
US$35 to US$40 a square foot range for really beautiful architecture. You’ll
find a link to a local architect below.
If you decide
to build, and if your Spanish is not good, hire an interpreter or a builder
who speaks English. I’ve worked with Gabriela Gangotena, general manager
of Miro Property Developers, an excellent developer who has some decent
Gabriela’s firm has a great reputation as they have developed (and are
developing) property all over the country. She is building for US$37 to
US$50 a square foot according to location.
when one buys a new construction, a 5% down payment starts construction
and 25% is due in four payments at agreed stages of construction, and the
balance of 70% due on completion of construction.
financing (in U.S. dollars) on that 70% final payment is now available
in the 9% to 10% range. This is still quite a high interest rate compared
to U.S. mortgages, but much lower than the unacceptable 15% to 18% rate
we have encountered in past years.
To be on the
safe side, you can involve your attorney from the beginning and certainly
you should ask around to make sure of your builder before you begin. Recently,
title insurance also became available in Ecuador.
are no problem. Whether you build or buy, utilities are pretty easy to
obtain in cities and advanced towns. Cell phone rates are expensive but
competition is fierce, so prices are coming down. Broadband technology
is available only in cities.
Ecuador offers the comforts of the U.S. at an inexpensive price, whether
you buy or build. Just do your homework before you buy.
Scott has been conducting real estate and investing seminars in Ecuador
for 11 years. His next program runs November 4-6 in Quito, Ecuador. Economists,
global investment and currency experts, exporters, Ecuadorian attorneys,
builders, business people and Americans who now live and do business in
Ecuador speak at this course. Then, optional inspection and real estate
tours are offered to Cuenca, the Andean Highlands and Ecuador’s Pacific
coast. Details are available at http://www.garyascott.com/catalog.