Tax benefits from your Ecuador property

Investing in Ecuador real estate doesn’t only give you a piece of paradise. It also presents a slew of tax benefits. Here are a few details you need to know.

1. Deductions on taxable income

Just like your properties in the US, the real estate you own abroad will be taxed in much the same way.

This means you get the same tax benefits for properties abroad as you do for your real estate investments back in the US.

Here’s a list of tax deductible items:

• Mortgage interest and property tax payments you make on properties for personal use.
• Expenses you incur for renting out property for more than 14 months. While you’re taxed on what you make off your rental, you can deduct insurance premiums, utility payments, and property management and advertising fees.
• Depreciation costs. In Ecuador, the depreciation for a property is amortized over a period of 40 years, versus only over 27.5 years for a US property. This means you enjoy this tax benefit longer for a property abroad.
• Travel expenses related to maintaining and managing your rental property abroad

2. Deductions when you sell your property

As with a US property, you get capital gains tax benefits for a long-term property investment abroad. In Ecuador, a piece of property is considered your prime residence if you’ve lived there for at least two years.

This means that when you sell the property, you can deduct up to $250,000 (or up to $500,000 if you’re a married taxpayer) from the sale amount, and save on capital gains tax along the way.

3. No double taxation

If you’re afraid of being taxed twice for your Ecuador property– once by the Ecuador government and again by the U.S. government — relax.

Taxes you pay on your overseas property may be credited against your US tax return. This means you only need to pay the higher amount stated on either your US or Ecuador returns – and not totals on both.

To find out more about buying property in Ecuador, contact us today.

Filed under: Ecuador Real Estate Blog, Expat Tips, Real Estate Tips by LiveTheLifeinEcuador
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