Taxes. Yuck. No one want to pay them. Nobody likes paying them.
The idea is to pay less of them.
It seems like everyone has some differing ideas on what taxes are payable in the Dominican Republic and what aren’t. Let’s clear up the confusion :). The following is taken from the DR law firm of Guzman Ariza’s website. This is one of the oldest and most respected law firms in the country, and one we use regularly for our client’s real estate needs. You can view the entire taxation publication here. Below is a summation of Dominican Republic taxes and how they affect our buyers:
A 1% tax is assessed on real estate owned by individuals (real estate purchased personal names, not in a corporation) and is based on the cumulative value of all properties, as appraised by government authorities. This means the following:
- Real estate that is owned in personal names is subject to property tax of 1% of the government assessed value of the property (which is always much lower than market value – at least at this time). This amount is cumulative, meaning the values of all the properties you own will be added together to form your tax bill.
- This calculation is based on any amounts over $6,858,885.00 Dominican Republic Pesos (approx. $150,000 US). This means you will owe property tax on any amounts over $150,000 US.
- For many of our buyers, there simply isn’t any tax due. Between the exemption above and the lower government assessed value, there is no tax owing.
- If the government assess your property closer to market value, then you will pay 1% of any amount over $6,858,885 Dominican pesos. The amount of the exemption is adjusted annually for inflation.
- The real estate tax is payable every year on or before March 11, or in two equal instalments: 50% on or before March 11, and the remaining 50%, on or before September 11.
Some of our buyers choose to form a Dominican company and buy under that corporation. If this is the case, then property taxes are not due on the property, but tax on corporate assets is due instead. In the case of a company simply owning a property as its main business (no income from other sources), then a 1% tax is due on the company assets: the property. Again, the amount due is on the government assessed value of the property, which is lower than market value. Depending on the value of the real estate, our buyers pay anywhere from $800 US/year to $2,500 US/year.
There is a one time transfer tax which is payable at the time the title is moved from the vendor’s to the purchaser’s name. This amount is 3% of the government assessed value of the property, not the price of purchase stated in the deed of sale. As mentioned above, the government has historically valued real estate at less than true market value.
Dominican Republic taxes are very reasonable – many of our buyers find living here to be virtuously tax free. For more information, please contact us.
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