Closing Costs & Taxes: A Foreign Investor’s Guide

Understanding the financial obligations involved in purchasing and owning property in the Dominican Republic is essential for a smooth investment. Here is a clear breakdown of the one-time costs and ongoing taxes you should budget for.

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

When buying property, you should budget for total closing costs generally ranging from 4% to 6% of the contract price.

• Property Transfer Tax (3%): A one-time tax based on the higher of the purchase price or the government-appraised value. This is required to transfer the Title of Ownership into your name.

• Legal & Notary Fees (1% to 1.5%): Covers your attorney’s critical due diligence, drafting the Promise of Sale, and managing the title transfer.

• Administrative Fees (~0.5%): Miscellaneous stamps and registration fees at the Land Registry.

• Pro-Tip: The government-assessed value is often lower than the market price, which can effectively reduce your 3% Transfer Tax liability.

🏠 2. Annual Property Taxes (IPI)

Once you own the property, you may be subject to the Impuesto sobre la Propiedad Inmobiliaria (IPI).

• The Rate: 1% annually.

• The Exemption: This tax is only calculated on the value above the annually adjusted threshold (currently approx. $170,000 USD).

• Example: If your property is valued below the threshold, you pay $0. If it is valued above, you only pay 1% on the difference.

• Payment: Due in two installments (March and September). Owners aged 65+ with only one property in their name are often exempt.

📈 3. Capital Gains Tax

When you sell your property, profit is subject to a Capital Gains Tax.

• Rate: 27% of the net gain (sale price minus acquisition costs and documented improvements).

🌟 4. The CONFOTUR Advantage (Huge Savings)

For many new-build projects in tourist zones, the CONFOTUR Law (158-01) provides massive incentives that can save you thousands:

• 0% Transfer Tax: Complete exemption from the initial 3% closing tax.

• 0% Annual IPI Tax: Exemption from the 1% annual property tax for 10 to 15 years.

• 0% Rental Income Tax: Potential exemption on tax from income generated by the property for 10 to 15 years.

• Action Step: Always ask your realtor if a project is “CONFOTUR-certified” to maximize these benefits.

Invest with Confidence

Navigating taxes and legal fees doesn’t have to be complicated. Our team ensures full financial transparency so there are no surprises during your investment journey.

For personalized advice or to view tax-exempt properties, visit buydrproperty.com.