1. One-Time Real Estate Closing Costs (Paid by Buyer)

When purchasing property in the DR, buyers should budget for one-time costs generally ranging from 4% to 6% of the contract price (or government-assessed value, whichever is higher).

Closing Fee Breakdown:

Property Transfer Tax

  • Rate & Basis: 3% of the higher of the purchase price or the government-appraised value.
  • Description: The primary tax required to transfer the Title of Ownership from the seller to the buyer. Must be paid within six months of the sale contract signing.

Legal Fees & Notary Fees

  • Rate & Basis: 1% to 1.5% of the purchase price.
  • Description: Covers your attorney’s Due Diligence (critical step!), drafting the Promise of Sale, notarizing documents, and managing the title transfer through the local Registry office.

Stamp/Registration Fees

  • Rate & Basis: 0.5% (Varies slightly based on local office).
  • Description: Small administrative fees required for the official registration of the deed in the Land Registry.
Crucial Tip: The Government-Assessed Value, used for tax calculation, is often lower than the actual market price. This lower assessed value can effectively reduce your 3% Transfer Tax liability.

2. Annual Property Taxes (IPI)

Once you own the property, you are subject to the annual Real Estate Property Tax, known as Impuesto sobre la Propiedad Inmobiliaria – IPI. However, generous exemptions apply.

Annual IPI Tax Rate for Individuals:

  • Rate: 1% annually.
  • Basis: Calculated only on the excess value above the annually adjusted exemption threshold.
YearApprox. Exemption Threshold (USD)
Current (2025)$170,000 USD
Note: This threshold is adjusted annually for inflation. 
  • If your combined property value is below the threshold, you pay $0 in annual IPI tax.
  • If the value exceeds the threshold, the 1% tax is only levied on the difference.

IPI Payment Schedule:

The annual tax is due on or before March 11th. It can be paid in two equal installments due on March 11th and September 11th.

Key IPI Exemptions:

  • Seniors: Owners aged 65 or older are exempt from IPI on their single primary residence, provided they own no other properties.
  • Rural Land: Land used for farming or agriculture is generally exempt.
  • CONFOTUR Properties: Properties that qualify under the Tourism Incentive Law are exempt from IPI for 10 to 15 years (see Section 4).

3. Selling Property: Capital Gains Tax

When you eventually sell your property in the DR, any profit made is subject to capital gains tax.

  • Capital Gains Tax Rate: 27% of the net gain (sale price minus acquisition cost plus approved improvements/costs).

4. The Biggest Tax Advantage: CONFOTUR Law (Tourism Incentive) 🌟

For investors purchasing properties in government-approved tourism projects (often new construction), the CONFOTUR Law (Law 158-01) provides massive tax incentives:

CONFOTUR Law (Law 158-01): Massive Tax Incentives

For investors purchasing properties in government-approved tourism projects (often new construction), the CONFOTUR Law provides the following major tax benefits:

1. Transfer Tax

  • Standard Cost: 3% one-time tax
  • CONFOTUR Benefit: 100% EXEMPTION

2. Annual IPI Property Tax

  • Standard Cost: 1% annually (above threshold)
  • CONFOTUR Benefit: 10 to 15 Years EXEMPTION

3. Rental Income Tax

  • Standard Cost: Subject to Income Tax
  • CONFOTUR Benefit: 10 to 15 Years EXEMPTION

CONFOTUR is a game-changer for international real estate investment in the DR. It significantly lowers initial closing costs and reduces long-term holding costs.

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