Basic procedure to buy a house 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.
- Most properties are held in Dominican Corporate names, which give you two major advantages. One is, not having to pay any transfer taxes. You simply transfer the Corporation which contains the only asset, the property you are buying. The second is the avoidance of any inheritance issues.
- If a property is not held in a Dominican corporation, then you will need to pay a transfer tax. 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 that 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. The costs today to form a Dominican corporation are approximate $1,200.00.
- 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.