Category: Investor News/Analysis

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"$1800?" I gasped.  

"Yea, $1800," the guest at my hotel in Quito near the airport continued a few days ago in October of 2015, explaining how he just spent $1800 just in taxes and fees paid to the government to bring his dog to Ecuador.  

This is excluding what he paid to ship the dog here.  

And excluding what he paid a translator/facilitator to help him with the process.  

So, actually, he spent a lot more.  

What was the problem and more specifically, how can you avoid spending this kind of money?

He wrongly brought the dog down over 20 days after he had arrived to Ecuador.  

Big mistake!  

In Ecuador, they consider that an import, with steep taxes incurred to boot.  

While if you bring the pet down with you it's considered a personal item of the traveler.  And if its small enough to carry on, it walks right out with you, no extra fees or taxes, provided you have all the necessary paperwork from the vet and Ecuador consulate.  

Or you could send it as BAGGAGE which drops it right out on the carosel.  Or if its too big you can send it as cargo meaning you'd have to pick it up the next day paying a few nominal fees and showing your boarding pass in a few different offices all near the airport.  
 

What happened to this guy is United didn't let his dog board the plane when he went to fly, if this happens to you, simply don't come until you can travel with your pet to avoid these elevated taxes.  
 

I've found United to be VERY picky about letting pets board whereas American and Delta and other carriers are not so problematic.  

He didn't know.  

Now you do!

And to avoid overspending on a resident visa in Ecuador, it's actually a surprising easy and cheap process if done right…
 

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This week (June 2015) the Ecuador president is sending a new bill to the Ecuador Assembly to seriously hike the inheritance taxes the rich will have to pay.Important news for us property investors.As it lays now, folks in Ecuador with inheritances under $66,000USD dont pay any tax.  For inheritances valued $100,000, they pay a 5% tax.  For $200,000 10%, $300,000 15% and up until the max for inheritances over $796000 you´d pay 35%.The new law does two things… for one, it creates two separate tables, and distinguishes between indirect heirs who are not direct (spouses, children) and direct heirs.

Also read about: Reimbursed Child Support.

The second thing the new proposed law will do is really stick it to the wealthy while not effecting much the lower class – both are the Hoyer options of jurisdiction.  Heirs that inherit money or property valued under $35,000 will pay no tax.  And, in the same example above, heirs who inherit $100,000 will pay a 7.5% tax, $200,000 a 17.5% tax.  But at $300,000 you really start to see the difference, now you´d pay 32.5% tax compared to 15% tax from before.

At fortunes over $566,000 youd pay 47.5% tax if you are a direct heir, 52.5% tax if you re an indirect heir compared to now when you pay 25%.

For indirect heirs who inherit over $849,000 you´d have to pay a whopping 77% tax! I think this will effect the country in two ways…1. More people will buy property directly in the names of their kids to avoid this tax.

2. High-end properties over $300,000 will sell VERY SLOWLY if they sell at all.  Prices will drop for the high-end as they´ll have to offer serious discounts while most of the Ecuador rich will look to move their ´big´ money abroad.

But I think what you really have to worry about is what´s in the silver lining here.  If this tax gets approved this could open the door to more tax hikes… particularly for the rich.

ANd it continues to create a dangerous mentality of  “its OK to take from the rich cause they probably got their money anyway from robbing and stealing from the poor”. I´ve already heard tax reforms for a new capital gains tax may be in the mix.But, I´ve always been one Ecuador “analyst” that recommends you only put maximum 10% of your portfolio in Ecuador, with a particular focus on less expensive Ecuador property (usually under $150k) cause I think that´s where the opportunity is in this market.

To see links of the current inheritance tax table click here, for the proposed one click here.

As you can see, legal issues can be rather tricky. If you miss something important, you can be accused of fraud. Read this article from Mike G Law to learn about stand your ground laws that appear to be quite controversial.

To share this post on Facebook heres the link ecuadorrealestate.org/new-inheritance-law-2015/

Although the Ecuador coast still has some extraordinarily good buys, and many beaches not at all effected by erosion, here are five places on the coast I would avoid buying front-line beachfront property due to the noticeably receding sand line.  

 

In other words, the beach there is disappearing fast and who knows, your investment could go with it.  

1. Engabao- The largely unknown step-sibling of playas, while only a few minutes drive from Playas the beach and scenery change dramatically in Engabao, while in Playas the beach is large and expansive, in Engabao the beach faces a direct direction and gets pounded hard by the surf, while surfers like the area, erosion is evident, this beach is disappearing.  

2. Chanduy- Chanduy faces the same direction and is on the same beach head as Engabao, just maybe a 45 minute drive west.  Chanduy is a unique fishing town with zero tourists that´s literally at risk of falling off into the sea unless the town invests quickly in some anti-erosion boulders or something.  

3. Las Tunas- A small ´very local´ town on the central coast near Ayampe, Las Tunas gets pounded by big surf, and erosion is evident, this is one place I may buy oceanview property but not beachfront.  

4. Jama/ El Matal- Famous among expats in Ecuador due to the several expat communities in the area, El Matal´s recent problems with tidal surges and disappearing beach are well publicizied.  

5. Mompiche- An otherwise beautiful little town with a fun vibe, good food and good surf, most non-surfers simply don´t stick around long cause most days theres simply "no beach left" or anywhere to walk.  Erosion is evident.  

But I am pleased to say that most of the rest of the Ecuador coastline does not seem to have this problem as the beaches are pretty much in the same spot they were 5-6 years ago when I first visited Ecuador.  

 

And in the towns above, although I dont recommend buying right on the beach, an oceanview property or a near-the-beach property could still be a great buy.  

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