Your Dominican Republic Investment FAQs Answered

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Your Dominican Republic Investment FAQs Answered

Welcome to our comprehensive guide on Dominican Republic investment FAQs, where we demystify the intricacies of investing in this vibrant and promising destination. Whether you're a seasoned investor or exploring opportunities for the first time, our FAQs cover key aspects, from legal considerations to market trends. Navigate with confidence as we provide valuable insights to empower your investment decisions in the Dominican Republic.

Foreign Ownership and Legal Process:

Yes, foreigners are allowed to buy real estate in the Dominican Republic. There are no restrictions on property ownership for non-residents.

The general process involves making an offer, signing a preliminary contract, conducting due diligence, and finally, closing the deal with the transfer of ownership at the Public Registry.

Yes, you can hold a title in the name of a corporation. Our short list of preferred real estate attorneys can assist you in quickly establishing a new entity or a branch of a foreign entity. In the event of a sale, the shares of the corporation can be transferred to a new owner, corporation, or trust. You can also sell the company’s assets.

In the case of a real property transfer, the Seller is required to furnish you with the Duplicate Deed of Title Owner (Certificado de Titulo duplicado del Dueño) and all necessary documentation for registering the transfer at the land registry. Whether you make the purchase as an individual or a corporation, you will obtain full ownership of the property in fee simple.

Yes, reputable real estate agents and attorneys will conduct due diligence on the property, sellers, and buyers to adhere to Dominican law.

Title insurance is not customary in the Dominican Republic but it can be provided by a preferred Title and Escrow partner, Secure Title.

Property Types and Maintenance:

A wide range of properties is available, including beachfront villas, condos, apartments, and commercial spaces. The Dominican Republic offers diverse real estate options. We specialize in the luxury market allowing us to provide investors with the best options on the island, many of which are our exclusive properties.

The Dominican Republic is a safe and well-traveled country. Despite this, we always recommend that our clients purchase properties in gated communities that require identification verification prior to entry. All of these gated communities have a trained security staff that monitors the safety of the area. With regards to your property, hiring a reputable property management company (we can assist you with this) is essential to ensure it is being cared for while you are away.

Costs and Financing:

 Yes, additional costs may include transfer taxes, property taxes, closing fees, and legal fees. It's essential to factor in these expenses when budgeting for a real estate transaction. Our team can assist you with finding properties qualified for certain tax incentives that mitigate some of these costs.

Yes, local banks provide financing options. Non-residents can access financing options similar to residents, however, terms, conditions, and qualifying factors may vary. Some buyers also secure a Home Equity Line of Credit to finance their purchase in the DR. Banks typically require a 30% downpayment and an appraisal. It's advisable to explore different lenders and mortgage plans to find the best fit for your needs. We can assist you in this process.

As a seller, you can expect to pay real estate agents, real estate attorneys, and capital gains tax. As a buyer, you can expect to pay escrow fees, real estate attorneys, and transfer taxes.

Investment Opportunities:

Absolutely. Many property owners in the Dominican Republic choose to rent out their homes when not in use. The Dominican Republic is the top island in the Caribbean for income-producing vacation rentals. This can be a great way to offset ownership costs and turn a profit. Our preferred rental and property management partner, Alacasa, can assist you in this endeavor.

Popular areas include Punta Cana, Casa de Campo (La Romana), Santo Domingo, and Puerto Plata. Each region offers unique attractions and investment opportunities. Areas in the north like Las Terrenas are emerging in the luxury market.

 Rental yields can vary, but popular tourist destinations often provide attractive returns. For instance, Casa de Campo (La Romana), Punta Cana, Santo Domingo tend to have higher return on investment and occupancy rates. Of course this depends on many factors such as property amenities, property maintenance, and Property Management. Luckily, Christie’s International Real Estate Dominican Republic partners with Alacasa to ensure your property is in great hands after purchase. We have you covered in all aspects of your real estate journey in the Dominican Republic.

Yes, the Dominican government has implemented various initiatives to promote real estate development, such as tax incentives, infrastructure improvements, and streamlined approval processes.

The country's steady economic growth has positively influenced the real estate market, attracting investors and driving development. Economic stability often correlates with increased property value and investment opportunities.

Tax and Financial Considerations:

Property taxes (IPI) typically amount to 1% of the property's assessed value, which is determined based on the total square meters (m2) and its appraised value. In the case of properties owned by corporations, the applicable tax is levied on the assets (impuesto sobre activos). The company is obligated to pay the higher amount between the 1% tax on assets or 25% of its net income. Companies exclusively possessing real estate are generally subject to the 1% tax on their assets, with the property being the typical asset. It's important to note that tax rates may vary by location and change over time, so it's advisable to consult with local authorities for the most up-to-date and accurate information.

Transfer taxes are fees imposed on the transfer of property ownership. In the Dominican Republic, the buyer is responsible for paying transfer taxes, which are generally 3% of the property’s value. This tax is paid before you record the transfer of the title at the Department of Internal Revenue who will issue a receipt of payment.

CONFOTUR (Tourism Incentive Law) offers tax incentives and exemptions for qualified real estate developments in the tourism sector. This includes exemptions from property taxes (1% annually) and transfer taxes (3%) for 15 years. Not all properties qualify for this incentive, so it is advisable to reach out to one of our trusted real estate advisors so we can help you find the best opportunities.

While Escrow is not a requirement in the Dominican Republic, we always strive to protect the investment of our clients. Therefore, we utilize the Escrow services of Secure Title or a trusted real estate law firm. This service does require additional fees, but it is worth it to protect your investment.

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