Property Valuation methodology for investors' visa

It is my understanding that you can deposit $25,000 in a savings account or CD in an Ecuador institution, but as soon as you withdraw enough to lower the balance to less than $25,000, then your visa is over unless you purchased both property beforehand worth at least $25,000.  There is a 5% penalty for taking money out of Ecuador.  If you go the $25,000 in the bank route, you better make sure that it is a place that has deposit insurance, remembering that higher interest rates means higher risk.  Recently a place went under, had to deposit insurance, and the govt. said they would not be helping out, emphasizing the buyer beware principle.

Mugtech

Thanks very much for the information both on the deposit and the property requirement. I have visited the Ecuadorian government immigration site and I have not found  mention anywhere of the 5% penalty. Someone else I know here  warned me about that. Thanks very much for confirming it.

Additionally I did not see anywhere on the immigration site what I mentioned in my original post about the valuation being the appraised value of the property rather than the purchase price.  It is probable that I did not do sufficient research on this. So far its been bits and pieces of information from various sources to put the picture together. Would have been nice for all of this to have been clarified on the government site but there exists the possibility that I missed it as well.

Thank you also for the reminder on checking for deposit insurance.  From what I am learning, if one put money in a bank without insurance for the purpose of the visa and the bank went into insolvency, then the visa would be no longer valid.

Warmest Regards from Tena and many thanks for the kind interest

Expat42451

As I understand it, it is based on the government's assessment of the property, not the purchase price. I recently looked at a property in Mompiche. The original lot was purchased for $6000. The ex-pat who bought it then went to the municipality and requested the property assessment be adjusted up to $25000. The municipality happily cooperated because it means more tax revenue for them. She was then able to get her visa using the adjusted property value. I would not assume all municipalities are as cooperative, or that all properties are valued lower than the sale price. I picked up my land for half the municipality's official value.

Thanks very much for the information. It has been inferred that the municipality here would do much the same if I request it.  Unfortunately I am almost out of time on this 6 month visa so it looks like I will start again in 6 months.

Thanks for sharing this experience.

Expat42451

Please, dont forget to bring FBI report along to your papperwork!
They start asking for this a few months ago. Needs to apostille.

Be sure your name is correctly spell it. Get the translation in Ecuador. They refuse other translations even if it notarized! This happen to my husband and was a wasted money.

About the value property, just you ask at the municipality that you want to value it at 25k for your visa and they will help you. This is not a problem at all.

Have a safe trip!!

jessekimmerling wrote:

As I understand it, it is based on the government's assessment of the property, not the purchase price. I recently looked at a property in Mompiche. The original lot was purchased for $6000. The ex-pat who bought it then went to the municipality and requested the property assessment be adjusted up to $25000. The municipality happily cooperated because it means more tax revenue for them. She was then able to get her visa using the adjusted property value. I would not assume all municipalities are as cooperative, or that all properties are valued lower than the sale price. I picked up my land for half the municipality's official value.

Hi jesse,

It is amazing.. Like Municipality can happily give more assessed price so that you can have your investor visa..... But then accordingly how much tax one has to give???

Buying a property more safe for investment or keeping money in Bank?

Regards

ODAN wrote:

jessekimmerling wrote:

As I understand it, it is based on the government's assessment of the property, not the purchase price. I recently looked at a property in Mompiche. The original lot was purchased for $6000. The ex-pat who bought it then went to the municipality and requested the property assessment be adjusted up to $25000. The municipality happily cooperated because it means more tax revenue for them. She was then able to get her visa using the adjusted property value. I would not assume all municipalities are as cooperative, or that all properties are valued lower than the sale price. I picked up my land for half the municipality's official value.

Hi jesse,

It is amazing.. Like Municipality can happily give more assessed price so that you can have your investor visa..... But then accordingly how much tax one has to give???

Buying a property more safe for investment or keeping money in Bank?

Regards

Taxes here are negligable untill you start getting into larger pieces of land.

My personal opinion is that it's better to buy land, but I'm no expert on Ecuadorian banks and CDs.

I agree  it is always better (provided you do not get raped on the purchase price) to buy land.

When I did the exploration I did here in Tena- I was told that the annual tax on property valued at $25,000 is  $250. However this is word of mouth only, I have nothing written to prove this....nor have I seen anything in writing stating what the tax rate is on the valuation.

I did run into something  here on taxes that I found interesting. When buying rural or agricultural land I am told that there are no taxes on anything under 29 hectares- above 29 hectares you are taxed on the entire amount of land, not solely the excess i.e. 28 hectares, no tax. 31 hectares, tax on 31 hectares. I also understand from several farmers I talked to here that their tax rates are extremely low- one with 50 hectares indicated he paid less than $200 per year.

Unfortunately my visa (12IX)  expires October 26th and I have run out of time here so it looks like out of the country for 6 months.  I verified with several people that the visa can not be renewed and have been told that I can not re enter Ecuador within days or weeks on a tourist visa.

I thought I would post what I have since learned on valuation and taxes as a help to others who  hopefully wont have to waste the time I have  finding out what exists locally i.e. in Tena.

Regards and good travels and luck to all

Expat42451

expat42451 wrote:

I agree  it is always better (provided you do not get raped on the purchase price) to buy land.

When I did the exploration I did here in Tena- I was told that the annual tax on property valued at $25,000 is  $250. However this is word of mouth only, I have nothing written to prove this....nor have I seen anything in writing stating what the tax rate is on the valuation.

I did run into something  here on taxes that I found interesting. When buying rural or agricultural land I am told that there are no taxes on anything under 29 hectares- above 29 hectares you are taxed on the entire amount of land, not solely the excess i.e. 28 hectares, no tax. 31 hectares, tax on 31 hectares. I also understand from several farmers I talked to here that their tax rates are extremely low- one with 50 hectares indicated he paid less than $200 per year.

Unfortunately my visa (12IX)  expires October 26th and I have run out of time here so it looks like out of the country for 6 months.  I verified with several people that the visa can not be renewed and have been told that I can not re enter Ecuador within days or weeks on a tourist visa.

I thought I would post what I have since learned on valuation and taxes as a help to others who  hopefully wont have to waste the time I have  finding out what exists locally i.e. in Tena.

Regards and good travels and luck to all

Expat42451

Thanks expat42451... for lovely information...

There is a way that you can know how much tax are you going to pay..
When you ask for price, ask for the papperwork and ask to they let you check the "Impuesto Predial" You will see how much that person pays every year.
FB GoodLifeInEcuador.

MariaPiaBlog wrote:

There is a way that you can know how much tax are you going to pay..
When you ask for price, ask for the papperwork and ask to they let you check the "Impuesto Predial" You will see how much that person pays every year.
FB GoodLifeInEcuador.

Thanks Maria

MariaPiaBlog wrote:

There is a way that you can know how much tax are you going to pay..
When you ask for price, ask for the papperwork and ask to they let you check the "Impuesto Predial" You will see how much that person pays every year.
FB GoodLifeInEcuador.

Thanks Maria, that's a valuable bit of info.

expat42451 wrote:

A couple of weeks ago someone here mentioned that the government values purchased property  using the valuation in the municipality  where the property is registered and not the purchase price. From what I have been able to find out, this is much less than what might be the  sale price.

Be careful that you are not paying a highly inflated price for property. You don't want to be caught buying at the top of a real estate bubble. Narcos are using Ecuador to clean up their U$D through real estate, causing over inflated prices. The government is currently looking at legislation to control that, so prices may be coming down in the next few years.

Generally, real estate is worth 100 to 125 times monthly rent. Look at what locals are paying to rent an equivalent property. You don't want to be paying more then 100 to 125 times that.

Defuera

This is excellent information for everyone. I for one have been here for almost 6 months on a 12 IX visa- I am headed for Quito tomorrow to catch a plane out of the country because the visa expires in a couple of weeks  but...... this will be good to know if and when I come back.

I am the original poster of this thread and I find that there is a lot of bad information around and-- lots of  "hidden" information as well, whether hidden purposely or inadvertently I do not know. There are also a lot of charlatans and hucksters  who paint a much different picture than what actually exists. I have had best luck asking here on the forum rather than elsewhere, many times, even locally.

I originally considered property near the coast in several places- Montanita, Canoa, Bahia among them and found prices much higher than what I was led to believe reading various online "services" run by promoters to lure  outsiders in to purchase property. I didn't subscribe to any of them . I ve seen several others from the US and elsewhere who have had really bad luck in listening to a lot of the "gurus" and not doing their own diligence....some who have even lost goodly sums of money in efforts to live here permanently. 

I ve spent the last 5 months in Amazonia, my second time in country  in a little over a year, doing the diligence I felt necessary before investing in a culture where I am not a native.......a number of people I  have met ask when or if I would be returning to Ecuador. At this point I do not know. What I have experienced here in Tena hasnt left the best taste in my mouth so its up in the air whether I want another run at this or not. Your post is excellent and  should be deeply appreciated by both those in country investigating the purchase of property or those  in the US reading this.

Thanks  very much

Expat

expat42451 wrote:

I agree  it is always better (provided you do not get raped on the purchase price) to buy land.

When I did the exploration I did here in Tena- I was told that the annual tax on property valued at $25,000 is  $250. However this is word of mouth only, I have nothing written to prove this....nor have I seen anything in writing stating what the tax rate is on the valuation.

I did run into something  here on taxes that I found interesting. When buying rural or agricultural land I am told that there are no taxes on anything under 29 hectares- above 29 hectares you are taxed on the entire amount of land, not solely the excess i.e. 28 hectares, no tax. 31 hectares, tax on 31 hectares. I also understand from several farmers I talked to here that their tax rates are extremely low- one with 50 hectares indicated he paid less than $200 per year.

Unfortunately my visa (12IX)  expires October 26th and I have run out of time here so it looks like out of the country for 6 months.  I verified with several people that the visa can not be renewed and have been told that I can not re enter Ecuador within days or weeks on a tourist visa.

I thought I would post what I have since learned on valuation and taxes as a help to others who  hopefully wont have to waste the time I have  finding out what exists locally i.e. in Tena.

Regards and good travels and luck to all

Expat42451

I think you're mostly correct in your information about taxes on rural properties. My 91 hectares is taxed based on it's size, not it's value. My taxes are a little over $900 per year. I don't know how much of that is federal, and how much is local.

defuera wrote:

Be careful that you are not paying a highly inflated price for property. You don't want to be caught buying at the top of a real estate bubble. Narcos are using Ecuador to clean up their U$D through real estate, causing over inflated prices.

I noticed this too. In a lot of rural areas Columbians have bought up much of property.

[moderated: free advertisement is not allowed on the forum + pls recommend her on the business directory. Thank you]

jesseekimmerling and zinmanman

Thanks for the info. Also thanks for the recommendation for the attorney. Its cold and wet in Quito. Wish I were somewhere warmer. Soon

Expat