Your Dream Dominican Property Awaits:
The 7 Key Questions BEFORE You Buy Property in DR
Are you considering purchasing real estate in the DOMINICAN REPUBLIC?
It's natural to have numerous questions about where to begin, the best strategies, and where to find the best properties for sale in the DOMINICAN REPUBLIC, just to name a few.
The good news is that, if you're seeking expert guidance before investing in DOMINICAN REPUBLIC real estate, this blog post will steer you in the right direction.
The 7 Key Questions to Ask BEFORE Buying Property in Dominican Republic
1. CAN A FOREIGNER BUY PROPERTY IN THE DOMINICAN REPUBLIC?
YES, foreigners can buy property in the DOMINICAN REPUBLIC and enjoy the same rights and privileges as Dominicans.
-
Tax incentives like the CONFOTUR LAW
-
Property ownership in your name
-
Simple requirements: valid passport and driver's license
2. WHAT IS THE CONFOTUR TAX LAW/TOURIST LAW, AND WHAT ARE ITS BENEFITS?
The CONFOTUR Tax Law or the “Tourism Incentive Law No. 158-01” was created to promote tourism development in specific areas in the Dominican Republic with great potential as tourist destinations.
The benefits of the law are technically to the first owner(s) of the property as follows:
-
3% Title Transfer Tax Exemption
-
15-Year Income Tax Exemption Deferment on Rental Income Received — normally taxed at 20%
-
15-Year Property Tax Deferment — normally taxed at 1% of property value
3. HOW TO SELECT THE RIGHT REAL ESTATE AGENT TO WORK WITH IN DR?
Focus on Quality, Not Quantity — In the Dominican Republic real estate market, all agents typically share listings but not all agents have the same market knowledge or offer comprehensive services. Therefore, instead of wasting your time looking at the same properties with different agents, find the right real estate agent for you. In doing so, consider the following 5 key indicators:
-
A real estate agent with whom you feel very comfortable and who speaks your language.
-
A realtor who understands your needs.
-
An agent that has local expertise.
-
A real estate company in the Dominican Republic that offers a comprehensive line of real estate services.
-
A real estate agent who will negotiate the best deal for you on your dream property.
Choose wisely, build a strong partnership, and enjoy a smooth buying experience!
4. WHAT IS THE BEST PLACE TO BUY PROPERTY IN THE DOMINICAN REPUBLIC
The three most important things in real estate are LOCATION, LOCATION, AND LOCATION! The Dominican Republic offers diverse locations for various lifestyles:
-
For Beachfront Properties: Punta Cana, Las Terrenas, Puerto Plata, Sosua, Cabarete, Bayahibe
-
Highlight features: proximity to airports, healthcare, and tourist attractions.
-
-
For Mountain Retreats: Jarabacoa
-
Emphasize peace, nature, and proximity to rivers.
-
-
For City Living: Santo Domingo and Santiago
-
Focus on vibrant culture and investment opportunities.
-
-
Investment Properties: Short-term rentals (Airbnb) throughout the areas listed ab.
-
Commercial Properties: Shopping plazas, commercial bays, hotels, bed-and-breakfast, gas stations, apartment buildings, land to build, and much more.
5. WHAT ARE THE REQUIRED DOCUMENTS TO GET A MORTGAGE IN DR?
First, let's make clear that YES foreigners can obtain a mortgage in the Dominican Republic, but it's a rather long process and the interest rates are high compared to North America. However, to understand the reason why, think of a foreigner looking for a mortgage from a bank in North America but does not live there, have any credit history in the country or collateral to guarantee the loan — under those circumstances, it might be agreeable that it would not be easy (if not simply impossible).
Nevertheless, financing new construction is much easier and experience suggests that banks such as BHD Leon, Scotia Bank, and Asociación Cibao de Ahorros y Préstamos are easier to work with and are more receptive. With that in mind, before starting to search for properties it is always recommended to get pre-approved for a mortgage.
These are the required documents to get a mortgage in the DR
-
Copy of passport
-
Copy of driver's license
-
Copy of previous two years' tax returns
-
Copy of past three to six months' bank statements
-
Employment letter (if applicable)
6. IS IT BETTER TO BUY PROPERTIES UNDER A COMPANY NAME OR AN INDIVIDUAL?
Purchasing a property under a company name does provide some protection for the property and tax benefits but it comes at a price!
-
It has to be a Dominican company and the fee to register a company in the DR ranges typically between US$ 2,000 and US$ 5,000.
-
Regardless if the business is profitable companies are required to file and pay taxes monthly.
-
If the business is profitable, there will be a 27% income tax at year-end.
On the other hand, properties owned by individuals are only to an annual property tax of 1 percent of the value of the property — there are exceptions and incentives for undeveloped sites, farms outside city limits, and properties whose owners are at least 65 years old, have owned them for at least 15 years, and have no other properties.
7. IS AN ATTORNEY REQUIRED WHEN BUYING REAL ESTATE IN THE DR?
Although it is not required, having an attorney is highly recommended when purchasing property in the DOMINICAN REPUBLIC. An attorney will help avoid costly mistakes, especially in the DR — only because title companies are not used in the Dominican Republic, it is the attorneys who are responsible for conducting title research and ensuring all property-related documents are in order. Attorney fees typically range from 1% to 1.5% of the purchase price.
DISCLAIMER: We are NOT accountants or attorneys, and we are NOT in any way providing professional advice on tax or legal. For such advice or counseling, we recommend consulting licensed accountants and/or attorneys. If you require a referral, please contact us and we will be happy to refer you to a reputable professional in the field.
