Ecuador Capital Gains Tax


Ecuador Capital Gains Tax

Ecuador capital gains tax is not due on occasional property sale profits.

This is another Ecuador earning idea… fixing up properties… like this.

This can be profitable. Plus these profits can be tax efficient as well.

In Ecuador there is no capital gains tax on the occasional sale of real estate… so you can take a property like this…

Cotacachi condos

fix it t look like this…

Cotacachi-condos

and sell it without incurring income or tax tax liability in Ecuador.

You may still incur tax liability in your country of residence or citizenship. For example if you are a US citizen you may have US capital gains or Alternative Minimum Tax liability.

This is why it is of utmost importance that you consult a tax attorney on such matters.

In fact it now more important than ever to have legal advice (US citizens at least) when you bank and do business abroad.

For year’s we have advised readers of the advantages of investing, business opportunity and banking opportunities abroad.

The main benefit is greater opportunity.  This is the era of the global economy and those who invest globally have the greatest opportunity. This is the story we have been preaching for 41 years this May.

For example right now the US property market is quite slow. Ecuador’s market is strong.

Banking abroad provides access to more experienced global investment knowledge and the ability to execute global investments and business more efficiently.

Another benefit is added asset protection.

I regularly get notes like this from readers who are professionals and in business…

“Gary, I continue to be bothered by an unjust lawsuit that is actually  extortion.  The legal fees are crazy. Such is the legal system now that even when you are totally innocent, you lose even if you win.”

When you invest and do business globally, assets held correctly abroad are safer from seizure via civil action.

However, we have also continually warned of the great risk of doing global investing and business  without good legal advice. Monday’s message looked at the importance of making sure that you use overseas banks in the correct way.

An excerpt from a recent article in the Financial Times entitled “Swiss agree to relax bank secrecy rules” points out the importance of this advice.

The article says:

BERNE, March 13 – Switzerland agreed on Friday to relax its strict bank secrecy rules and co-operate more on tax evasion in a last-ditch attempt to fend off a global crackdown on tax havens that is rattling the offshore banking industry.

In a landmark statement, the Swiss government said it would embrace standards for tax cooperation and exchange of information set by the Organisation for Economic Cooperation and Development, meaning more information on suspected tax evaders will be shared with other countries.

”Banking secrecy does not protect tax crimes. International cooperation on taxes has become more important given the globalisation of financial markets and in particular against the background of the financial crisis,” Swiss president and finance minister Hans-Rudolf Merz told a news conference.

A decision on Thursday by tiny offshore rivals Liechtenstein and Andorra to adopt more tax co-operation has put even more pressure on Berne.

It comes on the heels of moves by other centres, including Singapore, Hong Kong, Jersey and the Isle of Man, to open up.”

An article in the New York Times outlines the focus importance that taxing authorities have placed on tax havens.  The article was about how US President Barrack Obama acted as a mediator during a recent tense meeting between The French President Sarkozy and Chinese President Hu who were arguing about tax havens during the Group of 20 meetings.

The article said:

“Mr. Sarkozy wanted the big communiqué produced by the Group of 20 to endorse naming and shaming global tax havens, maybe even including Hong Kong and Macao, which are under China’s sovereignty. Unsurprisingly, Mr. Hu was having none of it. He appeared angry that Mr. Sarkozy was effectively accusing China of lax regulation, and that the French leader was asking China to endorse sanctions issued by the Organization for Economic Cooperation and Development, a club of wealthy nations that Beijing has yet to join.

According to accounts provided by White House officials and corroborated by European and other officials also in the room, Mr. Obama escorted both men, one at a time, to a corner of the room, to judge the dispute. How about replacing the word “recognize,” Mr. Obama suggested, with the word “note?”

The result: “The era of banking secrecy is over,” the final communiqué said. “We note that the O.E.C.D. has today published a list of countries assessed by the Global Forum against the international standard for exchange of tax information.” Hong Kong and Macao did not appear on the list.

In other words, be global by all means… but make sure you have a local attorney who helps you do everything legally and correct.

The attorney I use is Joe Cox.  You can reach Joe at jcox@coxnici.com.

Learn more about Joe Cox here.

Back to the fixer uppers.

If a person spends time in Ecuador  and stays alert, they’ll see many incredible fixer upper bargains.

Just over a year ago, Merri and I bought the four story office building shown above.   We began cleaning it up an converting two floors into condos.

I could sell these for double what I paid… and still have the two downstairs floors… though they are not for sale.

Construction costs are low. Local craftsmen are handy.  They’ll do things you ask.  So we can afford to use great tiles in the kitchen but keep costs down.

This was the third floor… the kitchen especially…

was a mess.

Here is the third floor now.

ecuador-banks

This if fully furnished with…

ecuador-banks

one bedroom and …

ecuador-banks

office/den (or second bedroom)  and…

ecuador-banks

balcony.   The kitchen now…

ecuador-banks

looks great.  The hardwood cabinets had not been installed when I took this shot.

This was the 4th floor, before…

now let’s head up the stairs and see  it after.

ecuador-banks

This is a loft studio with…

ecuador-banks

great light and an open feel with…

ecuador-banks

full dining area and…

ecuador-banks

kitchen.

ecuador-banks

These floors are among the highest points in the village and views from both units are the best around.  Morning’s give…

the sunrise over Mt. Imbabura.

ecuador-banks

Evenings offer sunset in the east on Mt. Cotacachi.

ecuador-banks

Views are great at night with the village alight.

ecuador-banks

and you can see the entire village…

ecuador-banks

and both mountains during the day.

Where we had huge walls we said…”How about windows with a view?”.   The builder  figured out what height was needed to see Mt. Cotacachi and simply knocked the window openings in the walls. Then he built hardwood window surrounds that frame this view.

ecuador-banks

The bathroom includes a full tiled bathtub and spa shower like this.

ecuador-hotel-savings

The king size sleeping nook has this view also and is fully curtained…

ecuador-banks

with full hardwood closets.

ecuador-banks

These units are available for rental on a three, six or 12 month lease by the way.

Fixing up has property provided Merri and me with sopme nice extra profit… that is totally tax free in Ecuador. Though our last Ecuador fixer upper profits did create some US tax liability.

In these times of change the best ways to gain opportunity are with real estate, commodities, stocks and your own business.  For those who want to live full or part time in Ecuador and earn extra tax efficient profits, that avoid Ecuador capital gains, consider buying and fixing up Ecuador property.

Gary

Join us in Ecuador.

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