Real Estate Buyers Guide
Buyers and investors of real estate will find information here to make decisions regarding the purchase of a property in the Dominican Republic. Nevertheless, it is important to consult always a professional who will answer any questions or concerns you may have regarding your future proprietary purchase.
Real Estate Governing Law:
Real estate transactions in the Dominican Republic are governed by Ley de Registro Inmobiliario (Property Registry Law) No. 108-05 and its Regulations.
Foreigners are allowed to purchase property in the Dominican Republic. As a foreigner, you must fulfill the same requirements as Dominicans, and you will need to obtain a tax identification number (Registro Nacional del Contribuyente (RNC)) to convey property in your favor.
Before the closing date, all parties of the transaction should review and approve the documents to be executed, review any power of attorney, if applicable, and obtain the title research of the property. Once the closing date is agreed upon, buyer and seller should sign and exchange the following documents:
- Purchase and Sale Agreement: Buyer and seller must sign a purchase and sale agreement before a Public Notary who will authenticate the signature of each one. This agreement should contain the legal description of the property, the purchase price and other specific conditions of the purchase.
- Original of the Title Certificate and Survey Plan: Seller must deliver the original of the title certificate (Duplicado del Dueño) of the subject property and its survey plan.
- Copy of Identification Documents: The corresponding Title Registry where the property is located will request copy of the passport (foreigners) or Dominican ID card (Cédula de identidad y electoral)
Tax Payments: Original Certification from the National Internal Revenue (DGII), declaring that the subject property is exempted from the Property Tax Payment (Impuesto a la Propiedad Inmobiliaria (IPI) or evidencing the last payment of the Property Tax. The IPI is the tax on luxury dwellings and empty urban lots (houses and condos), lots located in urban zones where a construction has not bee raised, or where it occupies less of 30% of the property may be exempted from payment. Properties held in the name of an individual are subject to an annual payment, whose value exceeds the Five Million Dominican pesos (RD $5,000,000.00). This tax is paid at an annual tax rate of (1%), of the bona fide value of the property, payable in two payments, March 11th and September 11th. If the property is held by a corporation, no property tax is due. Instead, the corporation must pay a 1% tax on corporate assets. Transfer Tax to convey and record the property in favor of the buyer is approximately 3% of the property market value established by the Internal Revenue Department (DGII) or the purchased price indicated in the purchase and sale agreement. This tax is paid by the buyer before the recordation of the documents at the Title Registry. Payment of minor expenses such as Internal Revenue stamps and receipts.
Deposit of Documents:
After payment of tax, the buyer or its representative has to deposit, for recordation at the corresponding Title Registry the following documents:
- Original of the Purchase and Sale Agreement;
- Title Certificate of the property (Duplicado del Dueño);
- Original documents evidencing tax payment;
- Copy of Buyer’s and Seller’s identification card (Cédula de Identidad y Electoral or passport), and If applicable, any document authorizing the Title Registry to cancel any mortgage affecting the property.
Issuance of the Title Certificate:
The Title Registry will review that all requirements and documents are fulfilled and completed to proceed with the recordation of the new sale. The Title Registry will cancel the submitted Title Certificate and issue a new Title Certificate in favor of the Buyer. The time from the filing of the documents to issue the new Title Certificate may vary from time to time, depending on the amount of work that the Title Registry has at that moment (usually it takes one (1) month.) Once issued the new Title Certificate in its favor, Buyer may (with its personal ID) retire it or may grant a Power authorizing his attorney to pick it up on his behalf.
If you are buying the property through an entity or a Dominican company, you should have ready to be deposit at the Title Registry the following documents:
- Company’s Bylaws;
- Shareholders List;
- Board of Director Resolution authorizing the purchase of the property;
- Merchant Registry and Tax identification number of the company (RNC).
If you decide to purchase through a Dominican company be aware that all corporations must present a financial statement to the Dominican Tax Department annually, declaring its operation during the past fiscal period, or declaring non-operational during that period. If you do not present the sworn declaration, such omission is considered a violation under the Tax Code, and your company’s registration can be suspended and cannot celebrate business operations.