Real Estate Investment in Cabarete: A Guide for a Successful Transaction

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Tips to keep in mind when buying your new Home in Cabarete

The Dominican Republic has become the epicenter of tourism flow in the Caribbean, and today the nation is the most visited country in the region. The country is known for its beautiful beaches and the north coast has some of the most beautiful beaches in the entire country, especially known for Cabarete, the mecca of water sports, a coastal town visited every year by lovers of water sports such as windsurfing and kitesurfing.

 

In addition to these incredible conditions that make the north coast the ideal destination within this Caribbean nation, the north coast is a paradise on earth that is home to a fast-growing real estate industry, with a diverse ecosystem, rich in luxury properties perfect for foreigners. investment, whether this investment is with the intention of inhabiting the property or renting it out to generate additional income.

A diverse community

condo apartment in encuentro cabarete

 

In Cabarete, for example, it is popular to find a diverse community of outdoor activities that offer a unique experience for visitors and residents alike. In the area, you can enjoy activities as different and varied as golf, hiking, mountain biking, rafting, surfing, windsurfing, kite surfing, and scuba diving, among others.

More than just a Great Investment

 

  • The Dominican Republic, with high-income potential, registered more than 7 million visitors in 2022, a record since the pandemic.

  • Stunning beaches with world-class facilities including world-class resorts, hotels, restaurants, and golf courses.

  • Accessible destination with hundreds of flights from the U.S./Canada.

  • The fastest-growing economy in Latin America, with a gross domestic product (GDP) that registered a total growth of 26% in 2022 for the tourism sector.

  • Tax incentives for international investors.

  • Political and economic stability.

  • Excellent investment environment.

Cabarete, Dominican Republic

More than just a town, a Magical Landscape

Cabarete, located in the province of Puerto Plata, is one of the favorite destinations for those visiting the Caribbean country. Cabarete is a tourism town that has become the world’s number-one destination for water sports.

 

In this coastal city, as in the country, there are no restrictions for foreign citizens to buy or acquire property. The only requirement is that they have a title deed in the official registry to keep track of all purchases made by foreign citizens for statistical purposes. Foreign citizens may purchase property in the Dominican Republic with the same rights and duties as Dominican citizens.

Beachfront

Privacy and Prestige like No Other

sea horse ranch villa for sale in cabarete dominican republic
  • The Dominican government also encourages investment and, when it comes to the real estate industry, there are certain incentives and benefits that can be taken advantage of. These include, but are not limited to:

Tax-free receipt of foreign-source pension income is guaranteed, including the transfer of belongings into the country (Law 171-07 on Special Incentives for Pensioners and Persons of Independent Resources).

 

 

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  • Foreign buyers receive a 50% exemption from the property tax.

  • Tax exemption on dividends and interest income, generated in the country or abroad.

  • Foreign buyers receive an exemption of 50% of the mortgage tax, when the creditors are financial institutions regulated by the Dominican financial monetary law.

  • Exemption of the payment of taxes on household and personal goods.

  • Exemption of taxes on patrimonial transmissions.

  • Partial exemption of taxes on vehicles.

  • Developers are exempt from all national and municipal taxes for ten years, including the tax on the transfer of ownership to the first buyer of a property, by Law 158-01 of Incentives to Tourism.

Considerations about Home in Cabarete Investments

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Investing in property in the Caribbean nation is relatively easy, but having the advice of real estate agents is essential to understand each step of the buying process and the implications of investing when you are a foreigner. Below we explore some important steps for a successful investment:

  • The parties involved sign a “contract of sale and purchase” or “purchase and sale agreement” and pay a deposit which is usually 10%. This will serve as a reserve and will take the property off the market.

  • Your attorney will conduct due diligence (title search, survey supervision and obtain important documents from the seller, including a photocopy of the title.

  • At closing, payment is made in the currency requested by the seller or, failing that, the rate applicable at the time of the transaction. Subsequently, the “Contrato de Compraventa” is authenticated by the lawyer/notary.

 

  • Your lawyer will submit the documents to the Registry of Titles and it will normally be in the name of the new owner in 30-45 days.

3 bedroom villa in Sosua cabarete

Costs to be Considered

When buying a property in Cabarete, Dominican Republic, there are various costs to consider. Here is a list of some costs associated with purchasing the property:

Costs Paid by the Buyer:

  • Notary Fee: Typically ranges from 0.25% to 1% of the property’s purchase price. This fee covers the services of a notary public who authenticates and oversees the property transaction.

  • Documentary Stamp: Usually around 1.30% of the property’s purchase price. This fee is imposed on legal documents, including property deeds, as a form of taxation.

  • Legal Fees: You may require legal assistance for contract review and to ensure all legal aspects of the transaction are in order. Legal fees can vary.

Costs Paid by the Seller:

  • Real Estate Agent’s Fee: Typically 5% to 10% of the property’s sale price. This fee compensates the seller’s real estate agent for their services.

  • Capital Gains Tax: If applicable, the seller may need to pay capital gains tax on any profit made from the sale of the property.

  • Transfer Tax: Transfer tax per Dominican law is 3%, and will be the buyer’s responsibility.

  • Broker’s Commission: In some cases, if a real estate broker is involved in the sale, the seller may need to pay a commission to the broker.

Annual Property Taxes:

 

  • Individually Owned Property: Property tax is calculated at a rate of 1% of the government-assessed value of the property, but this tax is applicable only if the assessed value exceeds DRP 7,138,000 (approximately USD 147,000). Some exceptions apply:

    • Unbuilt lots or farms outside city limits are exempt.

    • Properties owned by individuals who are over 65 years of age, have registered the property in their name for more than 15 years, and do not own other properties are exempt from this tax.

  • Corporate-Owned Property: If the property is owned by a corporation, no property tax is due. However, the corporation is required to pay a 1% tax on its corporate assets.

  • Rentals: Rental income in the Dominican Republic is tax-exempt.

Mortgage Financing:

 

  • Challenges for Foreign Buyers: Foreign buyers may face challenges when seeking mortgage financing in the Dominican Republic.

  • Ideal Financing Source: It is recommended that foreign buyers explore financing options with their home banks, as they may offer lower interest rates compared to local banks in the Dominican Republic.

  • Seller Financing: Some sellers or developers offer financing to buyers, including foreign buyers, with the following terms:

    • Interest Rate: Typically between 6% to 8% fixed APR.

    • Down Payment Requirement: Buyers are generally required to make a down payment of 50% of the property’s purchase price.

    • Amortization Period: The loan term or amortization period typically ranges from 3 to 5 years.

 

Explore all of the exceptional homes in Cabarete. Contact us today and learn how Cabarete Properties can become a key partner in your real estate investment in the Dominican Republic. Reach out to us and together, we can turn your Caribbean dream in Cabarete into a reality.

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