Can anyone sell or buy or own property in DR?
There are no restrictions for foreigners to purchase and/or own real estate in the Dominican Republic. Full ownership 100% on your name or whatever other legal entity/company. You only need a passport and a second id. This can be for example a driver’s license. You don’t have to be a resident to buy or sell or own a property here in the Dominican Republic.
A “Contract of Sale” or “Purchase Agreement” is made and signed by the parties of interest and the required deposit, usually, 10%, is placed in the Escrow account. This will reserve the property for you and, in essence, take it off the market.
Many properties are held in Dominican Corporate names, which give you several advantages. One is, not having to pay any transfer taxes (if you buy the company that holds the property). You simply transfer the Corporation which contains the only asset, the property you are buying. The second is the avoidance of any inheritance issues. And avoiding liability.
If a property is not held in a Dominican corporation, then you will need to pay a transfer tax (if you buy). Currently, the tax approximately is 3% of the appraised value. This value is a government calculation and does not necessarily reflect the true value of your purchase (usually far less than the actual cost). At this point, it is highly recommended that you have your Attorney form a Corporation for you to avoid this tax in the future if you decide to sell and to provide you with the inheritance benefit.
Closings are normally within 30-60 days depending on the agreement of buyer and seller. All buyers’ funds should be in the Escrow account 3 days prior to closing. On the closing date, both buyer and seller will sign the appropriate documents, or someone you appoint can act on your “Power of Attorney” to handle the closing for you.
Your Attorney will record the sale with the Registrar of Titles, and typically it will be in the new owner’s names within 30-45 days. Legal fees are 1% of the actual sales price.
Further information about taxation, permanent legal residency, inheritance taxes, incorporation of a Dominican company, and other legal matter you find at Guzman Ariza, Attorneys.
In general around 1% of the actual sale price + 18% vat-tax over that amount. This includes all necessary contracts for closure, due diligence from the property, and the steps to transfer the Certificate of Title in the name of the new owner. The buyer pays for legal fees. The seller pays the real estate commission.
Example on a property from 300,000 USD: 1% = 3,000 USD. 18% over that amount is 540 USD so total legal fees 3,540 USD.
The tax on property transfer, which is 3,1% of the registered value from the property at the DGII (DR tax office).
If the property is owned/registered on a company, this company pays an annual 1% tax on company assets. However, the amount of tax on assets paid by a company can be applied as a credit toward its income tax obligations.
Property(s) owned by an individual and assessed by the DGII (DR tax-office) below around 145,000 US) will be exempt from yearly property taxes and any excess will pay 1% per year over that difference. All properties owned by a company will pay 1% per year of the assessed value with no exemptions. The following properties are exempt from paying real estate tax: farm/rural properties, homes whose owner is 65 years old or older (and has no other property in his or her name), and properties owned by companies, which pay a separate tax on their company assets.
According the DR’s Property Registry Law a property purchase cannot be recorded at the Property Registry without a clear Certificate of Title (with deslinde).
Prior to this law, transfers ownership of a property from the seller to the buyer did not necessarily guarantee the buyer the seller owned the property free and clear. Therefore, previous to this amendment, properties could be bought and sold, but the responsibility of obtaining a Clear Title Certificate was left to the buyer after the purchase. With the new law, a property must have a clear Certificate of Title prior to its sale, just as it is done in the United States, Canada or Europe.
A “deslinde” refers to a clear title that has been issued after the property has received the final judge’s approval certifying it has been properly surveyed and that its property lines and boundaries have been clearly defined and established from the original title dating prior to the new registry law or a new title altogether. No purchase should be carried out without a clear Certificate of Title.