Find out more about the tax benefits of real estate developments in the North Coast of Dominican Republic.
Are you considering buying a property in the Dominican Republic? As a foreign investor, it’s crucial to be aware of the tax benefits of real estate developments in Dominican Republic, that come with purchasing a property in this beautiful Caribbean country. In this blog post, we will delve into the tax advantages available to you when buying a property in the Dominican Republic, ensuring that you make informed decisions while maximizing your investment. Let’s explore the tax benefits that await you!
Understanding Transfer Taxes and Expenses
When buying a property in the Dominican Republic, it’s essential to understand the transfer taxes and associated expenses. At the closing stage, a transfer tax of 3% of the purchase price is typically paid. These taxes must be settled before filing the purchase at the title registry office. Additionally, conveyance taxes and expenses on real estate transactions are estimated to be approximately 3.5% of the government-appreciated value of the property. This includes a 3% transfer tax based on the market value of the property, as determined by the tax authorities. However, there is a potential loophole that allows for the contribution of property into corporations without paying transfer taxes, with cooperation from the seller being crucial in this process. Notary fees ranging from 0.5% to 1.5% (depending on the property value and transaction complexity) are also part of the expenses to consider.
Exploring the Benefits of the CONFOTUR Law
Have you heard of the CONFOTUR law? This is a remarkable benefit available to certain developments in the Dominican Republic. The Tourism Incentive Law 158-01, also known as CONFOTUR, was created in October 2001 with the objective of incentivizing real estate investments and large infrastructure projects in defined tourist areas of the country. The law aims to promote the development of lesser-served tourist areas and protect the environment. One of the key benefits for individuals purchasing properties within CONFOTUR-approved projects is tax exemptions.
Under CONFOTUR, property buyers can enjoy the following tax exemptions:
- Exemption from the 3% Transfer Tax for transferring the title certificate to the buyer’s name at the Internal Revenue (DGII). This represents significant savings as 3% of the property’s value is eliminated.
- Exemption from the Annual Property Tax, which amounts to 1% of the exceeding value of RD$7,438,197 (approximately US$148,000) of the property. This means that any surplus amount above the specified value will not be subject to the annual property tax.
- Exemption from taxes on capital increase, sale (e.g., in case of property resale), and contributions in kind.
- Exemption from taxes on declared rental revenues, which typically represent 27% of the rental income.
It is important to note that the period of exemption under CONFOTUR is usually 15 years from the moment the project is granted CONFOTUR status, not from the completion of the project. Additionally, if you purchase a property through the creation of a company, such as an SRL (LLC), you can transfer the benefits of the law to the future buyer when selling your unit or company. Each project may have a different start date for CONFOTUR benefits, so it’s crucial to verify this information with developers or your real estate agency.
Take Advantage of Tax-Free Listings in Cabarete
Are you ready to explore the listings that enjoy tax-free benefits in Cabarete? Discover exceptional opportunities and maximize your investment by investing in CONFOTUR-approved projects. Take advantage of the long duration and the facilities developed for the application and approval of new projects under CONFOTUR. To find the perfect tax-free property in Cabarete, click the button below.
A Dream made Reality
While CONFOTUR is not renewable, it still represents a significant advantage due to its long duration and the ongoing development of new projects with favorable tax benefits.
Start living your best life
Don’t miss out on the tax benefits and investment opportunities in the Dominican Republic. Start your property search now and explore the tax-free properties available in Cabarete. Our experienced team is here to guide you through every step of the way, ensuring a smooth and rewarding real estate experience. Click below to discover the tax-free listings and make your investment dreams a reality!