Buying Guide

The Dominican Republic has no restriction on foreign ownership of property, Dominicans and foreigners have the same rights and obbligations governed by Property Registry Law No. 108-05 and its Regulations, in force since April 4, 2007.

This is a brief description of the buying process:

1-When a buyer is interested to make an offer for a property usually the agent prepare a written “offer to purchase” subject to some terms and conditions is signed by the buyer and submited to the seller who usually has 1 or more days to either accept or decline it. If the initial offer is declined further negotiations may be needed, if the offer is accepted a 10% deposit is required to reserve the property and take it off the market. Because of certain peculiarities of Dominican Real Estate Law, it is recommended that the prospective buyer hire a real estate attorney before signing any documents or making a deposit: the 10% deposit should be wired into the buyer’s attorney escrow account. The typical cost of a real estate lawyer for drafting the documents, performing the due diligence . escrow service and new title issue is approximately 1% of the purchase price or lower for high valued transactions. A binding Promise of Sale is prepared by an attorney (solicitor) or notary public which is signed by both parties. Payments are conditioned on the availability of clear title and success of a due diligence phase.

2-The buyer’s lawyer will start a due diligence process involving a title search, a land  survey , review of all the seller’s documents, review of the tax compliant status of the propery, review of paid utility bills and paid employment obbligations if the property had workers employed.

3- Upon successfull complection of the due diligence (it may take 2 or 4 weeks) a Deed Of Sale is prepared, it is the final and formal sale agreement signed by  both parties (or by their proxies if a power of attorney has been prepared by a seller or a buyer living abroad) in the presence of a Notary Public. The  Dead of Sale is the instrument for conveying the property from the seller to the buyer upon full payment of the sale price which is now transfered from the escrow account to the seller.  The old title is delivered to the buyer by the seller.

4-The buyer’s lawyer look after the request of fiscal value appraisal by the local tax office (Direccion General de Impuestos): under Law No. 288-04 the buyer must pay a  Transfer Tax which is set at 3% of the apprisal value and must be paid to the Tax Authority.

5-Once the Transfer Taxi s paid, the old title,  a copy of the purchase agreement , receipt of the Transfer Tax being paid are taken by the buyer’s lawyer to the local Registry of Titles and usually withing 60 to 90 days from the date of the final sale a new title is issued in the name of the buyer.

The total cost of the process for the buyer including the lawyer’s fees, the Transfer Taxes and the Document Stamp Tax  is  5% of the property value.

After the purchase each year non residents are taxed in the Dominican Republic for their income from Dominican Republic sources: if the property is rent then its rental income is taxed at 27% , if later the property is resold by the buyer at an higher price, the capital gain is taxed at 27%.

A Property tax based on tax appraisal value of the property (usually at much less than the market value) is due each year with a rate of 1%  on on tax appraisal value of the property  DOP 6,800,000 ( approximately 130,000 USD). Properties with values below the threshold amount are not taxed.

Buyers becoming resident in the Dominican Republic with an Investor Residency Visa enjoy many tax exemptions on their property purchase. At Sosua Re we can assist buyers during the whole buying process from house selection and we can recommend the best lawyers and escrow services available for a safe and secure purchase. Without proper assistance and professional advice buyers's fraud are common in the Dominican Republic, maximum care and attention in every step of the deal is needed.

Tribunal de Tierra de Puerto Plata (Land Court of Puerto Plata)