Real costs of buying property in the Dominican Republic

The Direccion General de Impuestos Internos (DGII) describes a unified real estate transfer tax of 3 percent of the value of the property transferred. The legal base cited on DGII materials is Article 20 of Ley 288-04, as modified by Article 7 of Ley 173-07. DGII taxpayer guides also state that the tax is due within six months of the transfer act, and that late payment brings the surcharges and interest set in the tax code.

DGII materials also mention a small additional process charge set by law (RD$20.00 in the guides we reviewed). Use the DGII site for the current form, the current calculator, and any update to those figures. If a seller tells you the tax is optional, ask your lawyer to confirm it against DGII, not against a brochure.

The transfer tax is not the lawyer. It is not the notary. It is not the bank's appraisal. It is not the insurance a lender may require. It is not the Impuesto al Patrimonio Inmobiliario (IPI) that can apply after you own the property. DGII notes that a transfer generally requires the property to be current on IPI or the assets tax, as applicable. Check that point with DGII and with your lawyer before you set a closing date.

Legal and notary fees are agreed with those professionals. We will not invent a typical percentage. Ask for a written quote that lists what is included. The same is true of title searches and any work at the real estate registry.

Write four columns: the purchase price, the transfer tax as DGII currently states it, the quotes your lawyer and notary send, and the fees the bank writes if you borrow. Leave a blank line for items you have not quoted yet. A blank line is more honest than a number you invented.

Ask who pays each line. Some contracts shift a cost to the buyer or the seller. Your lawyer should mark that on the contract, not on a handshake. If the property is pre-construction, ask what happens to deposits if the delivery date moves. That question belongs with your lawyer and, if you borrow, with the bank.

Foreign buyers should convert the list into the currency they actually use to save, and keep the peso figures next to it. The Banco Central publishes market FX information. Those series are not a quote from a bank teller.

After you own the property, the DGII IPI page describes an annual tax on the taxable real estate wealth of individuals and trusts. DGII currently states a 1 percent rate for individuals on the excess over an exemption the same page publishes, and it lists two payment dates (11 March and 11 September). Confirm those figures on that page before you budget. IPI is not the 3 percent transfer tax.

DGII transfer materials also list a request form (FI-DVB-012 in the guides we reviewed), identity copies, the notarized transfer act, and the need for the property to be current on IPI or the assets tax. Your lawyer should confirm the current form and the current list. We do not file the tax for you.

A bank offer can include origination fees, appraisal fees, insurance, and early-payment rules. You have a right to complete cost information before you sign, as ProUsuario sets out. Compare those lines with how to read a loan offer.

Non-resident buyers should also read how mortgage applications usually work. The currency of the price, the tax, and the loan may not be the same. Ask everyone to write the currency next to each number.

We can help you build a purchase budget and a cost list and prepare a mortgage application. We do not sell property, we do not collect the transfer tax, and we do not replace your lawyer or notary.

If a number in this article no longer matches the DGII page, follow DGII. You can ask a question if you want the cost list laid out next to a bank file. For consumer questions outside banking, Pro Consumidor is the national consumer office.

Do not use a friend's closing from last year as your budget. Tax forms, bank fees, and lawyer quotes change. Rebuild the list for this property, this contract, and this year. If someone offers to 'include everything' in one round number, ask for the breakdown anyway.

If the property is already built, ask for the title status and whether IPI or the assets tax is current. If it is pre-construction, ask what happens to money already paid if the project is late. Those answers come from your lawyer and from the contract, not from this article.