Residence

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Real Estate

Country information

Population: 17.980 Mill hab Aprox.

Capital: Quito.

Official Language: Spanish.

Income percapita: $15.700 Dólares PPA.

Can Foreigners Buy Property in Ecuador?

Yes, foreigners can buy property in Ecuador, and there are no significant restrictions for foreign nationals. Foreigners are treated the same as Ecuadorians when it comes to buying real estate, with a few exceptions for agricultural land, which may require additional permissions.

Types of Property You Can Buy:

• Residential Property: Foreigners can buy residential properties, including homes, apartments, and condominiums.

• Commercial Property: Foreigners can also buy commercial properties such as shops, office buildings, and other business properties.

• Land: Foreigners can buy land in Ecuador. However, there are restrictions on the purchase of agricultural land.

  • Agricultural Land Restrictions: Foreigners cannot buy agricultural land larger than 5 hectares (12 acres) unless they have lived in Ecuador for 3 years as a legal resident. This restriction is to prevent foreign ownership of large amounts of agricultural land.

Process of Buying Real Estate in Ecuador:

The process of purchasing real estate in Ecuador involves several steps:

a. Step 1: Choose the Property

• Research available properties online or with the help of a local real estate agent. Popular websites for finding properties in Ecuador include Plusvalia and FundaCasa.

• You can also visit properties in person, especially if you're considering a major investment.

b. Step 2: Agreement and Due Diligence

• Once you have found the property you want to buy, you will usually sign a preliminary agreement or "compromiso de compra-venta" with the seller.

• It is important to carry out a title search to ensure the property is legally owned by the seller and free of debts or liens. This can be done by a lawyer who will review the property records in the Registro de la Propiedad (Property Registry).

• You can also hire a notary or lawyer to ensure there are no issues with the property.

c. Step 3: Signing the Sales Agreement

• The final purchase of real estate in Ecuador is completed in front of a notary public. A notarial deed is required for the property transfer to be legal.

• In this meeting, the seller and buyer sign the final purchase agreement. The notary will also confirm that both parties agree on the sale price and that the payment has been made.

• The notary will verify the identity of both parties and witness the signing of the contract.

d. Step 4: Paying Taxes and Fees

• You will be responsible for the following costs:

  • Property Transfer Tax: The buyer must pay a 1% property transfer tax based on the sales price (or appraised value, whichever is higher). This tax is usually paid after the contract is signed.

  • Notary Fees: Notary fees are typically around 1% to 2% of the property value, and the cost varies depending on the property.

  • Registration Fees: The property transfer must be registered with the Property Registry (Registro de la Propiedad), and the registration fee is typically around 0.1% to 0.3% of the property’s value.

  • Legal and Other Costs: If you use a lawyer to assist in the process, there will be legal fees. Translation services may also be required if you're not fluent in Spanish.

e. Step 5: Finalizing the Transfer

• After signing the deed and paying the necessary taxes and fees, the notary will register the transaction with the Property Registry (Registro de la Propiedad), officially transferring the ownership to you.

• You will receive a copy of the registered deed, which serves as proof of ownership.

Foreigners and Property Financing:

Foreigners can purchase property in Ecuador with cash or financing, but the availability of mortgage loans for non-Ecuadorian citizens may be limited.

• Cash Purchases: Many foreigners choose to pay in cash for their property purchase in Ecuador, as it simplifies the process.

• Financing: Some Ecuadorian banks may offer mortgage loans to foreigners, but the process is more complicated, and the down payment can be substantial (typically 20% to 30% of the purchase price). Banks may also require you to prove legal residency in Ecuador or have a stable income in the country.

Property Taxes in Ecuador:

• Annual Property Tax: Ecuador has an annual property tax called Impuesto Predial, which is generally low compared to many other countries. The tax rate is based on the value of the property and can range from 0.1% to 1% per year.

• Capital Gains Tax: Ecuador imposes a capital gains tax on the sale of real estate. This tax is typically 10% on the profit earned from the sale (i.e., the difference between the purchase price and the sale price), but there are exemptions, such as for properties owned for more than 2 years.

Restrictions on Agricultural Land:

As mentioned, there are certain restrictions on the purchase of agricultural land by foreigners:

• Maximum Land Area: Foreigners are prohibited from purchasing more than 5 hectares (12 acres) of agricultural land unless they have lived in Ecuador for at least 3 years as a legal resident.

• Exemptions: Foreigners can buy larger agricultural plots if they are part of a business investment, such as farming or agricultural development, and meet certain criteria.

Legal Considerations:

It is strongly recommended to work with a local lawyer or notary public who specializes in real estate transactions in Ecuador to ensure that the process runs smoothly. They can help:

• Perform due diligence on the property.

• Review the sales contract and ensure it's legally sound.

• Help with the property registration process.

Residency and Property Ownership:

Buying property in Ecuador does not automatically grant you residency. However, owning property can support your application for an investment visa or pensioner visa if you meet the financial requirements.

• Pensioner Visa: If you are receiving a pension and can prove you have at least $800 per month in income, you may be eligible for a pensioner visa, which allows you to live in Ecuador.

• Investor Visa: If you invest in real estate or a business in Ecuador, you may be eligible for a temporary residence visa. The minimum investment for an investor visa is usually around $25,000.

Conclusion:

• Yes, foreigners can buy real estate in Ecuador, and the process is fairly straightforward, especially for residential and commercial properties.

• Agricultural land may have more restrictions for foreigners unless you meet the requirements.

• The purchase process involves finding a property, signing a contract in front of a notary, paying taxes and fees, and registering the property with the Property Registry.

• Legal assistance is recommended to ensure the transaction is handled properly.

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