Congratulations! You are one step closer to your dream home in the beautiful Caribbean. Buying a home (especially a home abroad) is simultaneously one of the most important and most exciting decisions you’ll make in life.
Closing costs in Dominican Republic are typically lower than what you might see in the United States or Canada, especially if the property comes with the Tourism Incentive Law (Confotur Law Dominican Republic).
Closing Costs: What to Expect?
You should expect to pay the following fees when closing on a property in Dominican Republic:
Property Transfer Tax (Conveyance Tax) in Dominican Republic:
Real estate transfer taxes are 3% of the property value. However, if the property applies for the Tourism Incentive Law No. 158-01 (CONFOTUR law Dominican Republic) you will not pay any conveyancing taxes.
The benefits of purchasing property with the Confotur Approval are substantial. This is exciting because there are a lot of new developments with this benefit in many great places like Punta Cana, Las Terrenas, Sosua and Samana.
Property Tax in Dominican Republic:
A 1% annual tax is assessed on real estate properties owned by individuals, based on the cumulative value of all the properties as appraised by government authorities. The 1% is calculated only for values exceeding $8,138,353.26 DOP (about US$140,000). Properties are valued without taking into consideration any furniture or equipment to be found in them. So, if you only have one property and it is worth less than US$140,000.00 you won’t pay any property tax.
The real estate tax is payable every year on or before March 11, or in two equal installments: 50% on or before March 11, and the remaining 50%, on or before September 11.
Also, if the property you choose applies for the Tourism Incentive Law No. 158-01 (CONFOTUR law Dominican Republic) you will not pay the annual real estate tax for 15 years.
Legal and Professional Fees:
A Real Estate Lawyer in Dominican Republic will charge you a percentage of the purchase price for their services. Generally, a reputable attorney will charge you between 1% and 1.5% of the purchase price depending on the property. You can get a lawyer for less, but be careful, sometimes that translates into them not doing the complete property verification or due diligence process, so it depends on your situation and if you are confident and comfortable enough with the solicitor you choose. Also make sure that the property attorney you choose is fluent in English or the language you speak, so there are no misunderstandings.
Dominican Republic Closing Costs: Who Pays?
In Dominican Republic closing costs are traditionally paid by the buyer. However, the real estate agent fees are paid by the seller or developer, not the purchaser.
Real Estate Closing Costs in Dominican Republic will vary depending on the property value and if the property applies for the Tourism Incentive Law No. 158-01 (CONFOTUR law Dominican Republic). Therefore, if the property you choose applies for the Confotur incentive, you can expect spending only 1-1.5% of the property purchase price in closing costs. However, if it doesn’t, you can expect spending up to 5% of the purchase price for closing costs. It wouldn’t be any more but could be less. This will include attorney fees, transfer tax, notary fees, stamps, checks and any other diverse closing costs associated with the purchase to get the title in your name.
For additional information about closing costs, property taxes, and Dominican real estate services, please do not hesitate to reach out to our team of professionals at CanaLaw. We would be happy to provide you with a free Estimated Closing Cost for your property.