As a foreigner purchasing overseas property, it is important to familiarise yourself with the buying process of your chosen destination. Below is a general guide to the property buying procedure in the Dominican Republic.
As an overseas buyer, you can freely purchase property in the Dominican Republic, but beware that there are unscrupulous real estate agents on the island offering property at inflated prices to foreigners, especially when their services are in English. It is wise therefore to have some knowledge of Spanish or bring a translator with you, and be sure to let agents know that you are familiar with the property market and the purchase procedure.
A good agent is essential when you buy a property in the Dominican Republic. Propertyshowrooms.com always carefully examine your particular requirements and provide you with a selection of appropriate options from our database. In addition, we can recommend all related professional services you will require to make a safe, reliable purchase. Most of our properties for sale in the Dominican Republic are located within off-plan developments as they currently offer the best value for money and represent general demand.
Once you have found your dream property in the Dominican Republic and your verbal offer has been accepted, you will initially need to part with a reservation fee (approx. 5,000 USD) in order to reserve your unit and take it off the market. This is offset from the 10% deposit paid with your initial Contract of Sale.
The buying procedure may vary slightly according to which developer you are purchasing from so, when buying on a new development, you will need to ask for their specific procedures.
As soon as you have paid your deposit, you will need to appoint a good lawyer who is fluent in your language so that you fully understand all the legalities and proceedings. Once you have confirmed your finance arrangements, our advisors can recommend a good lawyer who will carry out all necessary checks on the property or land and fulfill the legal requirements of the sale.
Be aware that the Internal Revenue Office determines the amount of taxes due as a result of the sale and these will need to be paid in advance of the final completion date.
Subsequent payments should ideally be made by depositing money into the lawyer's escrow account to be transferred to the seller’s account at the appropriate date or, in the case of a completed property, ready for final completion date. This avoids you losing your money in the unfortunate event that the off-plan purchase you wish to undertake is abandoned by its developers.
The Notary, a licensed and highly qualified law graduate, will authenticate the Contract of Sale, signed before him on the day of completion. Your lawyer will then submit the documents to the Title Registry Office to be registered in your name. Depending on what region of the Dominican Republic you buy in, this process can take anything from a day, to a month or even around 100 days.
In the Dominican Republic, title insurance is part of the government’s provisions for all buyers, allowing you full security of property ownership. You can purchase this during or after the purchase of your real estate. Then, in the event of any dispute over your title to the property, the title insurance company will defend you in Court and pay all valid claims or losses up to the amount on your policy.
Transfer Tax is set at 3% (law no. 288-04)
Property Registration Tax is 2% (law no. 108-05)
Stamp Duty is charged at DOP 232 on the first DOP 20,000, ten DOP 13 for more than DOP 1,000.
Legal costs generally amount to around 1% of the property value.
Property Tax is payable on luxury dwellings and empty urban lots (IVSS taxes). The current classification on the luxury dwellings is that any home worth more than DOP 5,000,000 is considered to be ‘luxury’ for tax purposes and will be charged at 1% of the property value. Homes worth less than this figure are property tax exempt.
If a property is held by a corporation, no property tax is due. Instead, the company must pay a 1% tax on corporate assets. However, any income tax paid by the corporation will be offset against its tax on assets, so that if corporate income taxes paid are equal to or higher than the taxes on assets due, it will be exempt from taxes on its assets/property.
Be aware that ongoing bills relating to costs and taxes for your property are not usually sent to you, making them easy to overlook until such time as you wish to sell up and a fine has been added to the total debt. If you wish to avoid this situation, you are advised to keep well informed from the relevant authorities as to how much you owe each year and where you must pay.
75% - 80% LTV mortgages can be obtained by foreign buyers in the Dominican Republic.
If you are planning to obtain finance for the property you will need:
The terms of your mortgage can be repayment or interest only for up to 2 years and can be raised in local currency, USD, GBP, Euro or CND.
Loans are typically taken for periods from 15 to 20 years, until age 65.
It is advisable to obtain mortgage approval in principle in order to speed up the process when you find your dream property. It is also reassuring to know that your loan is achievable in principle, when it comes to making reservation payments for new properties prior to formally applying for the mortgage.
Some developers of new build and off-plan developments offer installment plans over between 12 to 60 months. The charges applicable vary according to developer and repayments are usually index linked.
If you possess property in your own country and would like to borrow against this in an equity release plan, we can introduce you to an independent financial advisor who will help you raise the necessary finance for your purchase in the Dominican Republic.
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