Home Property in Dominican Republic
How to buy a house in Dominican Republic?
Here you will find the detailed information about real estate purchasing in Dominican Republic:
- the right way to choose the property and to effect the deal;
- property taxes and duties that should be paid;
- everything about home loans in Dominican Republic;
- home property management and renting;
- rental, commercial properties and related investment properties.
Real estate for sale
Most recent offers from house owners in Dominican Republic and from real estate agencies. Advertisements with the fixed price and auctions are listed here.
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Foreigners can acquire real estate of any type including land plots in the Dominican Republic.
On January 9, 1998 the president of the Dominican Republic Leonel Fernández Rein signed the decree on cancellation of all restrictions on the right of acquisition and possession of the land and the real estate for foreign nationals on the territory of the country. From this moment the way to tropical paradise of the Dominican Republic became simpler for a foreign capital and it is opened big advantages of economic and cultural growth for the country. Foreign money for acquisition of the real estate began to flow to the Dominican republic: a growing demand for it does such investment highly profitable because of rapid soaring of prices. The foreigners buy not only housing but also ready-made business or open enterprises here as the procedure of firm registration is simple as well as tax regime – the government of the Dominican republic made sure of comfortable situation for foreign business. Therefore travelling visas were cancelled for the majority of countries all over the world.
Also there are no any restrictions on inheritance of the real estate by the foreigners in the Dominican Republic. The inheritance bares tax from 17 to 32% depending on degree of kindred between a successor and a decedent. However if the successor is outside the Dominican Republic additional duty of 50% of the taxes sum is applied. In the country the right of "the statutory inheritance" exist when a part of the inheritance is obliged to come to certain relatives under the law. For example, if the foreigner has a child 50% of his inheritance have to come to his child regardless of the legislation of that country of which citizen was the decedent.
Beginning Of The Purchase Process
It isn't so difficult to perform the real estate purchase in the Dominican republic as the procedure is quite clear and extremely simple. For purchase it is necessary to have a passport and a deposit not less than $3000, all the rest of it is concern of a lawyer, a notary and a realtor.
At the beginning it is recommended (for residents of the country) to open an account in a Dominican bank. In this country a standard set of documents for opening of right current bank account in peso involves an application form, a copy of the passport or a sedula (temporary residence permit) if that is already available, one more identity card (for example, a driving license), two recommendation letters from the organizations existing not less than a year (it is possible to take them from the local realtor and the lawyer). In Some banks could also demand an extract from other accounts (for example, from saving account) in other Dominican bank.
Such account allows to make calculations by means of a personal check-book which allows to transfer great sums of money without a suitcase of cash, it is rather simple to draw the check. It is both safe and prestigious. The electronic debit card allowing to pay off in shops or to draw money in automatic teller machines is attached to the account. On a account balance the percent is charged monthly.
Let’s return to acquisition procedure: after the real estate is selected, the purchaser with the help of realtor writes an offer for the real estate purchase (Offer to Buy Real Estate). After its approval by the seller you should pay in a warranty bail – usually it is about 7-10% of the property cost (subsequently this sum will be recognised at final settlement).
Concurrently with the bail pay-in the seller and the purchaser sign up a preliminary contract of purchase and sale in the presence of the notary. At this stage there is the lawyer who will accompany the transaction. Even the locals use the lawyer services at the real estate transactions therefore the good lawyer will become the guarantor of that purchase will be a success.
Upon the signing of the preliminary contract of purchase and sale at the office of the notary who certifies the signatures of the parties, the purchaser pays a deposit. As a rule, the final settlement should happen within a month. There should be stipulated in the contract not only the conditions, the term of payment, the rights and obligations of the parties, but also the property description and its plan, the copy of a title. Correspondence between the property and its plan is verified by the lawyer and takess from 1 to 2 weeks. This stage is very important as it allows to insure against fraud when the unfair seller tries to sell, for example, the object which is similar to the described one according to the plan, but doesn't correspond to its characteristics.
Registration Of Ownership
As all the real estate transactions in the country are carried out on the basis of the System of the title registration (the rights of property possession), the lawyer checks legality of a title and its transfer from the seller to the buyer at the Office of the real estate registration (Title Registry Office), in the land court (Land Tribunal) and the state fiscal administration (General Internal Revenue Directorate, DGII). Whereat he prepares the final agreement of purchase and sale (contract), attests it at the notary and issues the title on a new owner.
Each region of the country has its own registration office. Purchases in the cities of Sosua and Kabareta which are most popular with investors are registered in Puerto Plata to which district they belong.
From the moment of signing of the final contract of purchase and sale (after 100% payment) the buyer is considered to be the property owner: now he can settle in. The lawyer pays the real estate taxes and begins the process of registration of the property certificate (title) at registration office. It can take from two weeks to three months, but the process can be accelerated for a certain payment in a number of agencies.
Upon the purchase of a ready-made villa the land plot is included in its cost and the buyer is granted the property certificate both on the land plot and on the villa. Upon the apartments purchase only the apartments are formalized and the land plot is formalized on a condominium (on all owners of apartments). The described procedure relates to the real estate acquisition both by the physical and legal entity.
The expenses at the property acquisition besides its cost include a tax on transfer of the real estate (Transfer Property Tax). It makes 3% of its estimated cost which usually is below than real one, but at present it is already established the lowest admissible price of land plots and of the real estate in the majority of locations because of numerous intended understatement of the cost. The lawyer fee makes about 1% of value of the transaction.
It is possible to reduce tax cost in this way. All one has to do is to buy a "pure" company (without debts on taxes) and to make an agreement with the seller about entering of the real estate into the authorized capital of the company, and then the seller will withdraw from the company with money of the buyer. The buyer remains with the company in which authorized capital there is the real estate. This scheme allows to reduce the tax approximately twofold, but the lawyer services will be slightly more expensive.
The payment is often carried out by a money transfer, but both cash and traveler's cheques are used too. The American Express cheques are the most popular: there are no any restrictions on their export therefore it is the most convenient way. Documents on money origin do not need. It is also possible to transfer money on the confidential account of the lawyer or to open a personal account in the Dominican republic, but a personal presence is required for this purpose. It is also possible to register the Dominican company and to open the bank account on it.
Mortgage And Construction
In the Dominican Republic it is rather difficult for nonresident to obtain the credit for the real estate purchase, however it is possible to use services of the mortgage broker. The credit sum makes 80% of the property cost, is given for five years under 20 - 21% per year. The list of documents depends on the bank.
Many developers make advances for the Russian buyers and offer payment by installments till 5 years. The buyers of the secondary real estate also have an opportunity to receive payment by installments from the owner. On average it is till 2-3 years under 8-9% per year.
After purchase of the land plot the construction of a turnkey villa (with a pool, landscaping, a kitchen) will take of half a year and will cost about $800-1200 for sq.m. The construction is conducted by local construction companies.
A permission for construction is got by the authorized Dominican engineer, its expenses are usually included in a total cost. For large commercial objects it can make sense to involve foreign contractors however it is necessary to pay the local engineer services so the total sum costs is plenty large enough.
At the land purchasing the lawyer has to make sure that the sold object can be used as the buyer wishes. It is connected with some legislative restrictions, for example, the Act 305 of 1968 establishes "maritime zone" of 60-meters (some analog of the Russian water conservation zone) measured from the tidal water line throughout all coastline of the Dominican Republic. It is prohibited to construct any buildings in this zone without special authority permission.
Besides, there are some restrictions on the construction of buildings in tourist zones regulated by DEFINPRO that is a special department of the Central bank. Some lands are sold strictly under agricultural business. When buying the real estate at a construction stage in the Dominican republic, it is possible to count on stage-by-stage payment or the bank credit till 20 years.
There are some statutory restrictions on height and number of floors. Now it is 8 meters and two floors for the villas and 11 meters and three floors for the apartments.
In case of purchase of the real estate which cost is over 5.000.000 peso ($1 = 37.0 peso) it is also necessary to pay an annual real estate tax (please refer to the section "Real Estate Allowance").
After the real estate acquisition it is much easier to obtain citizenship of the Dominican Republic as the migration service treats loyally to those foreigners who has the real estate in possession (please refer to the section "Visa regime").