OMG
Can anyone (including foreigners) own and occupy real estate in your jurisdiction (including shares in property owning companies)? Are there any restrictions?
Yes. Anyone, including foreigners that choose to invest in the Dominican Republic may do so without restrictions and under the same status, rights and obligations that the Constitution and domestic laws bestow upon Dominican nationals investing, owning and/or occupying real estate (including shares in property owning companies). Foreign companies, however, are required to set up a local branch or register a domicile in the Dominican Republic to acquire real estate properties.
Are there restrictions on lending for the purchase of real estate by foreign companies? If so briefly give an outline?
The financing of real estate purchases by foreign entities is not subject to any special law or restriction. However, any transaction involving determined amounts of money shall comply with all the normal obligations and ordinary regulations of the Dominican Central Bank, regulations on money laundering and requirements regarding information (i.e. Know Your Client).
Buying
Please provide a short summary of the fees and costs (including tax) relating to buying real estate in your jurisdiction.
The costs and taxes applicable during a real estate transaction are as follows:
- Stamp Taxes: US$100.00, approximate fixed expense.
- Transfer Taxes: 3% of the purchase price stated in the contract or the asset value assigned by Dominican tax authorities to the real estate object of the transaction.
- Capital Gains Tax: 27% of the surplus value of the property upon sale. The payment obligation of this tax relies upon the seller. However, buyer’s may be considered jointly and severally responsible for the non-compliance of the seller regarding this obligation provided that the buyer does not notify the Internal Revenues Department about the purchase within the 15 days prior to the execution of the definitive purchase contract.
- Notary Public's Fees: amount to be determined based on the purchase price and subject to the dispositions of Law No. 140-15 of notaries.
- Legal Fees: amount to be determined based on the legal counseler that will provide the assistance in the purchase.
Broker's fees, if applicable, may also apply (around 5-10% of the purchase price).
Owning
Are there taxes applicable to owning real estate and can the burden of the taxes be passed to someone else (e.g. a tenant or an occupier - not being the owner
Ownership of real estate is subject to an annual 1% property tax calculated based on the asset value of the property appraised by the Dominican Tax Authorities. This annual tax relies on the owner of the real estate property and is paid in two (2) instalments (March and September of each year).
Exemptions may apply if:
- The property value does not exceed the amount of RD$9,860,649.00.
- The property owner(s) are older than 65 years old and if this is the only real estate asset.
- Retired foreign residents or Dominican nationals whose incomes are, at least 50%, from a foreign source.
- Real estate subject to special domestic laws that may grant exemptions (i.e. agricultural).
Please note that certain jurisdictions, like the United States and Spain, for example, are subject to certain foreign ownership reporting requirements regarding properties owned abroad or income derived from such ownership.
Tax Breaks
Are there tax breaks or other incentives for foreigners to buy real estate in your jurisdiction? If so, what are they?
Tax breaks and/or incentives are granted only when applicable under a special law such as:
- Tourism incentive Law No. 158-01.
- Free-Trade zone Law No. 8-90.
- Immigration Law No. 285-04.
- Special Incentives for Foreign Source Pensioners and Rentiers Law No. 171-07.
- Special Zone for Border Development Law No. 12-21.
The applicable incentives may vary depending on the nature of the transaction, use/destination of the real estate, role of the incentive requesting party, etc.
How is the ownership of Real Estate evidenced in your jurisdiction?
Pursuant to the dispositions of Law No. 108-05, ownership of real estate is evidenced by a conveyance agreement, which is then recorded at the Title Registry Office closest to the property as a "public record."
Formal/public ownership is evidenced by a Certificate of Title issued by the Title Registry because of the registry of the conveyance deed that can be relied upon as proof of ownership and current encumbrances.
Is it possible to keep the identity of owners of real estate confidential in your jurisdiction?
The registries are public for those who have a legitimate interest in finding out the legal status of the property, documents, limitations or bans registered against the property. Hence, the information on ownership of real estate is publicly available in the Dominican Republic.