The Dominican Republic's tax framework for real estate is straightforward by regional standards — and considerably more favourable than most international buyers expect. The headline rates are low, the incentive regime is generous, and foreign ownership carries no legal restrictions. Understanding the structure before you buy is essential. Understanding it after you buy is expensive.
This guide covers every tax an international investor will encounter, from acquisition through ownership to eventual disposal.
The Transfer Tax (Impuesto de Transferencia)
Every property sale triggers a one-time transfer tax of 3% of the declared transfer value. This is paid by the buyer at the point of title transfer and is generally non-negotiable in practice.
The declared value is typically the higher of the agreed sale price or the government's assessed cadastral value (valor catastral). In established resort zones where market values significantly exceed cadastral values, the declared price usually governs.
Key points:
- Payable at the time of title transfer at the Internal Revenue (DGII)
- Cannot be avoided through corporate structures — the transfer tax applies at the entity level when shares in a property-holding company are transferred
- CONFOTUR-approved developments are exempt from this tax for qualifying buyers (see below)
The Annual Property Tax (IPI)
The Impuesto al Patrimonio Inmobiliario (IPI) is an annual wealth tax applied at 1% of the property's assessed value above the exempt threshold.
The exempt threshold as of 2026: RD$10,521,628 (approximately $175,000 at current exchange rates).
In practice, this means:
- Properties assessed below ~$175,000 pay no IPI
- Properties above the threshold pay 1% on the excess only
Example: A property assessed at RD$20,000,000 (
$333,000) pays IPI of RD$94,783 ($1,580/year) — not 1% of the full value.
The assessed value (valor catastral) is typically 40–60% of the true market value in resort zones, which further reduces the effective rate for most investors.
Exemptions:
- Property held in the owner's name as their primary residence is exempt
- CONFOTUR-approved tourism developments are exempt during the incentive period (10–15 years)
- Agricultural land has its own assessment regime
ITBIS (VAT) on New Developments
The Impuesto sobre Transferencias de Bienes Industrializados y Servicios (ITBIS) is the Dominican Republic's equivalent of VAT, levied at 18%. For real estate, it applies primarily to the construction services component of new-build purchases.
In practice, most developers either absorb ITBIS within their pricing or obtain CONFOTUR exemption (which provides full ITBIS relief). Buyers of existing, previously-sold property do not pay ITBIS.
Ask explicitly: does the listed price include or exclude ITBIS? The answer changes the effective acquisition cost by up to 18% on the construction portion.
Law 171-07: The CONFOTUR Tourism Incentive
Law 171-07, commonly referred to as CONFOTUR, is the most significant tax instrument for resort property investors. It provides a package of exemptions to qualifying tourism-sector developments:
| Tax | Standard Rate | CONFOTUR Rate |
|---|---|---|
| Transfer tax | 3% | 0% |
| IPI (annual) | 1% | 0% |
| Capital gains | 27% (corporate) | Reduced |
| ITBIS | 18% | 0% (on construction) |
| Import duties | Variable | Reduced/exempt |
CONFOTUR approvals are project-specific, not buyer-specific. The developer obtains approval for the project, and individual buyers within that project receive the benefits.
Duration: Exemptions typically last 10 years from the date of project approval, with some approvals extending to 15 years.
What this means for buyers: A CONFOTUR-approved condo-hotel purchased for $200,000 saves approximately $6,000 in transfer tax and $1,400–$2,000 annually in IPI during the exemption period. Over a 10-year hold, this is a $20,000–$26,000 benefit — material on a $200,000 investment.
Caveat: CONFOTUR status must be verified independently. Not all marketing materials accurately describe the status, and approvals can lapse if the developer fails to maintain compliance. Your attorney should confirm current status directly with the Consejo de Fomento Turístico (CONFOTUR board).
Capital Gains Tax
Capital gains on property in the Dominican Republic are taxed as ordinary income:
- Individuals: 10% flat rate on the gain
- Dominican corporations: 27% corporate income tax on the gain
- Foreign corporations: Same rates apply if the property is held through a Dominican entity
The gain is calculated as the difference between the purchase price (adjusted for certain capital improvements) and the sale price, both at declared values.
The underdeclaration problem: A well-known market practice is to declare values below actual transaction prices to reduce transfer tax. While this reduces acquisition costs, it creates a higher taxable gain at disposal and, in extreme cases, constitutes tax fraud. We do not advise it.
Ownership Structures for International Buyers
Foreign buyers have three primary ownership structures available:
Direct Personal Ownership
The simplest approach. The buyer holds title in their own name. No corporate overheads, no annual filings beyond IPI. Suitable for single properties held for personal use or simple rental income.
Drawback: Inheritance in the Dominican Republic follows the Spanish Civil Code tradition, with forced heirship rules that may not align with your estate plan. A local will should accompany any personal ownership.
Dominican SRL (Sociedad de Responsabilidad Limitada)
The Dominican equivalent of an LLC. Used when multiple investors are co-investing, or when the buyer wants to hold multiple properties under one vehicle and manage them collectively.
Costs: ~$800–$1,500 to incorporate; annual accounting and tax filings of $500–$1,200/year depending on complexity.
Benefit: Facilitates asset transfer via share sale rather than property transfer — potentially avoiding the 3% transfer tax on future sales (though DGII scrutinises this).
Foreign Corporate Ownership
A foreign company (US LLC, BVI company, Panama SA, etc.) can own Dominican property directly. This is used for tax efficiency by buyers with complex international tax positions.
Key consideration: The Dominican Republic's Tax Directorate (DGII) is increasingly scrutinising beneficial ownership of foreign entities. The OECD's Common Reporting Standard (CRS) has reached the Dominican Republic, and financial information exchange is expanding.
This guide reflects DominicanVest's research as of Q2 2026. Tax laws change. Always obtain independent legal and tax advice before transacting. Nothing in this guide constitutes legal or tax advice.