It's essentially "self-defeating".

Why? Because it will put a (large) brake on property transactions. Better to "have and to hold", so to speak, rather than give most of the proceeds to Govt.

What will be interesting to watch, however, is how this delayed - from 2015 - measure plays out in the election next year.

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Where did this $9000 figure come from? I haven't seen anything stating that anywhere.

I used the SRI online calculator with this example: Pay $100,000 for property, make no improvements and sell for $115,000 in 11 months. The result is no tax because it is not considered a speculative gain. If the sale is for $120,000 there would be a tax.

http://www.eltelegrafo.com.ec/noticias/economia/8/calculadora-cuanto-tengo-que-tributar-si-se-aprueba-la-ley-contra-la-especulacion-de-tierra

Here's another example, given by President Correa explaining what is a speculative gain:

http://www.eltelegrafo.com.ec/noticias/economia/8/nueva-norma-evitara-burbujas-inmobiliarias

Charlie B.

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The 9000.00 is approx 24 min wages . That is how it was explained to me
There was an uproar earlier this year when they brought this up and El Presidente pulled it before the vote. Have to wait and see
Regardless of the formula 75 percent is terrible.

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Thanks, I did see a mention of 24 SBU but failed to read the details.

The new SBU for 2017 will be $375, so the $9000 will now be exactly 24 SBUs.

I found a fairly good explanation of how the 75% fits into a typical gain:

http://www.eltelegrafo.com.ec/noticias/columnistas/1/ley-de-plusvalia

Under $9000 gain is exempt, then there's an allowable annual appreciation of sorts based on a passive interest rate. So as long as your gain doesn't exceed that allowable rate there's no taxable gain.

I think the average person looks at this and thinks the 75% applies to the total gain or the gain over the $9000, which is not the case at all.

Charlie B

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As I said, 75% of anything is very punitive.

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Yes it is. And it will drive behaviours, which may not be the intended ones. One such behaviour is people likely not selling at all.

It is effectively a reheating of the same laws they tried to bring in earlier (which you alluded to), and which sparked a sizeable number of protests. If the law does "get up" this time, one wonders what effect that might have at the ballot box...? The idea of rushing it through just prior to Christmas looks under-handed to me, and I'd be surprised if that wasn't the broader consensus...

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EXSOONER....lol....shades of Obamacare. I wonder if the two Socialists have been chatting? : >)))

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Could this be much ado about nothing?

Until it is passed and signed into law, this tax at this supposed level does not exist.

Wake me up on New Year’s Day and tell me what really happened, if anything.

cccmedia

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Well CC since El Presidente is behind this and controls the congress I would say this is something he is trying to squeeze in before the next election. When you wake up on the 3rd and it is law it will be to late. Ca n we do something about it? Doubtful, but it looks a little shady to bring it up during the holidays as it was pulled back before when people were paying attention.

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Remoore, I agree with you 100%! Anytime a government levies a 75% tax it is punitive!

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"looks a little shady to be bringing it up in the holiday season".......Well, gollllllllllyeee.........it would appear that our good socialist quechua speaking presidente is taking his cue from Washington where that has lonnnng been practiced............Correa who really started out so good and was among the ranks of the best and the brightest has just turned into a total tax monster............what a pity! He should have stopped at two terms and went to the Senate where he could still make some noise and have some influence.........He has so plummeted in popularity that the good people of Ecuador may even forget all the good things he once did.............

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Just a quick update for the board...

Firstly, it appears the legislation will pass. It has gone to a "2nd debate", essentially as proposed.

See here: https://translate.google.com/translate?hl=en&sl=es&tl=en&u=http%3A%2F%2Fwww.larepublica.ec%2Fblog%2Fpolitica%2F2016%2F12%2F23%2Fley-de-plusvalia-a-segundo-debate-sin-mayores-cambios%2F&sandbox=1

There is also some info. on the SRI site, which suggests that the law is not retrospective...See here:
https://translate.google.com/translate?hl=en&sl=es&tl=en&u=http%3A%2F%2Fwww.sri.gob.ec%2Fweb%2Fguest%2Fdetalle%3Fidnoticia%3D375%26marquesina%3D1

Hopefully, that means that those who've already purchased property there won't be caught up in the punitive changes...Anyone have a view on whether the above link does indeed suggest that the new legislation only applies to "extraordinary profits" realised on the sale of property purchased after the legislation has been enacted?

These were both run through Google translate, as my Spanish isn't yet up to reading and absorbing that kind of detail.

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Looks like it passed, but it is not as bad as it sounds. There is a calculator here:
http://www.sri.gob.ec/web/guest/calculadora-impuesto-valor-especulativo-del-suelo

But messed around with it, if you bought a property at 160K and sold it 3 years and 1 mo later for 200K, you only owe $3600 in cap gains tax, so less than 10%. It is based on time owned. If you own it for 5 years, you wont owe anything. So it really is for flippers.

bought for 120000 sold for 160000, 3yrs 1 mo, only owe $864, so you keep 39K profit. If you sell this same property after 11 month, you owe 17226. so it is really based on people that buy and sell something right away.

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Definitely a better deal for those who purchased prior to the legislation coming in, (if the link I posted is accurate), and they are making a decent capital gain*

*Note that a "decent capital gain" could well be assessed as the difference between what's noted on the escritura, and what was actually paid, assuming that the latter is what the property actually sells for...

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From my reading of the bill passed, it is definitely aimed at the land speculators and property flippers not at the average citizen. They are also going after the foreign real estate scammers who use an Ecuadorian shill to front for them.
Yes, those gringos who want to turn a quick buck may get screwed but they deserve it, as far as I'm concerned.
I've seen enough unscrupulous land grabs and phoney developments here in the last few years and am glad that the government is finally cracking down on them.
My wife and I recently purchased a terrano in a "new cooperative" development and built a caso de cano there for our weekend getaway place. We also purchased two lots for her sons to build on.
Because my wife "knows her way around the Municipal" and because we did things correctly, legally and with the necessary building permits, plans etc. we've got a nice little place, independent of the cooperativo.
The guy selling the properties was trying to make a fast buck, misrepresented ( surprise ! ) the fact that he had municipal approval, conned a lot of people and then found himself caught between the authorities and the angry buyers - several who were "speculators" purchasing multiple plots for resale.
Those are the type of people that this new law is aimed at.
I doubt we'll ever sell and when we're dead and gone, the property will pass ( legally ) to our youngest grandson. However, in a few years, should we decide to sell, I'm sure it will be at a handsome profit that I am perfectly willing to pay a "decent capitol gain" on. But given my age, from my reading of the law, I doubt it would be very much.

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I don't think anyone has an issue with paying a "decent" CGT. The issue is that taxing 75% of that gain is not really seen as "decent", but rather "punitive" in the extreme. (Irrepective of who it's aimed at).
In your case, it isn't relevant anyway. As I read it, it will not apply retrospectively, so someone like yourself - who purchased before the new legislation becomes law - will pay CGT under the old legislation. Were to purchase after the legislation becomes law, you would pay under the new scheme. Or did you read it as though the new legislation will apply to everyone, irrespective of when they purchased (pre or post legislation enactment)?

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Confiscatory

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What about all of Ecuadorians living in U.S. and owning the 300.000 + homes that are being rented. Talking about Quito and the "Redneck Riviera" . Please count them first before you accuse only the gringos. And perhaps those Ecuadorians should be paying 95 percent tax on what they send home from U.S.?

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Expatsooner,
Yeah, when I read that part of the bill, it did seem a bit ambiguous as to whether it was non-retroactive on purchases prior to 2016 or prior to the "date of enactment". As with all laws down here, interpretation is as varied as the multiple political parties.
While I know it probably won't affect ourselves, in our situation, I do know a couple of individuals who are frothing at the mouth because it will probably put a "yuge" damper on their future investment schemes, here. The old buy cheap, sell high ( as quick as possible to a gullible gringo with cash), is going to go bye-bye. In the long run, for someone here for the long term, this could be a very good thing. The idea is to _gradually_ grow the economy in Ecuador, and keep the money, as much as possible , here. Once you get past the headlines, the law makes sense.

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JOE....I know that of what you speak. Obama is trying to put a 30% exit tax...vs the 95% fo rEC...but it aint happenin'! The only way to enforce the tax law is via the IRS "garnishing" the funds of over paid withholding. So you know that's going to work....NOT! You're right on again, my friend. : >((((

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