Real Estate In The Dominican Republic

If you have been considering a home, apartment, ocean front villa or even rural farmland as well, it is very true that the Dominican Republic does offer some of the most attractively priced real estate in the Caribbean.  Dollar for dollar (or Peso for Peso) your money will go further in the DR. 

In addition, depending upon the value of the home you purchase, it is quite possible that your new home could be free of annual property taxes as well. 

However, just as is the case when investing in another country, local laws and regulations are different from what they are in your home country.  For that reason, its goodl to have someone on the ground, with the experience to make sure the entire process is as hassle free as possible - - and of course conducted in such a way that the investment you make is legally protected as well. 

Can foreigners own real estate in the Dominican Republic?

Yes, there is no restriction.  You don't need to become either a resident or citizen in order to buy real estate. You only need to present a copy of a current and valid passport as the identity document used for any sales contracts and eventual titles obtained from the title office. 

Again, there are no restrictions for foreigners to own property and unlike Mexico for example, no restriction for ocean front real estate either. 

Recent legislation passed in the country has also strengthened the legal rights of foreigners in the legal system as it pertains to property ownership and investments inside the country.  In addition, you may use a real estate purchase as proof of local economic solvency as it pertains the residency application process as well, should you wish to consider becoming a resident or even a citizen later on (Ascot Advisory can provide assistance with both the residency and naturalization process also).

Private title insurance in the Dominican Republic

There are two companies that do offer local title insurance and Stewart Title is one from the US that is well known to many Americans. 

You should ALWAYS conduct a title search by a trusted representative.  Searching a title principally involves checking BOTH title offices where the title will be registered (the local office in the province or district where the property is located and the main title registry office also in the capital, Santo Domingo). 

This is very important because it could be possible that a lien or encumbrance is registered in one office and not the other.  Also, it is equally important to check to see of the seller owes any back due property taxes (there are annual real estate taxes in the Dominican Republic despite some incorrect information floating around, but it is very inexpensive by North American standards). 

The reason for this that the tax office does not repossess property for back due taxes as a standard practice.  Instead they will keep a tabulation of the outstanding annual taxes that might be due, plus the 50-percent late penalty, and refuse to transfer title to the new buyer until all taxes have been paid. Obviously it would be better to know about any issues like this before you hand over any monies to the seller. 

Some key features of the purchasing process

One aspect of the property purchase process that may be different for someone coming from another country is the fact that a notarized sales contract constitutes an immediate legal right of sale and possession.  The meaning of this is, the moment both the buyer and seller sign the sales contract, exchange payment and have the contract notarized, the buyer has the immediate legal right to take possession of the property. 

Immediately following this, the process of registration of a new title into the buyers name begins, but in terms of legalities the initial notarized sales contract has legal weight under the law for ownership purposes.  Again, the title transfer in some respects can be considered somewhat of a formality that can take anywhere from 45 to 90 days, depending upon the expediency of the government title registration office.

Taxes or fees to be paid as part of the title process

Typically it is the buyer that would pay the costs for such fees or taxes, which in total can amount to roughly 7.5 percent of the purchase price.  There are a number of government fees and taxes related to this process, some are fixed fees where as others relate to or are a direct percentage of the transaction amount. 

Once the sales contract is signed and notarized, the property is yours (as the buyer) so with this logic in mind, the title transfer process normally something the buyer would want to do for his or her benefit and it is the buyers attorney that would take charge of this.

Annual Property Taxes in The Dominican Republic

That all depends upon the value of the home you purchase.  If you purchase a residential property and it is worth RD$5 Million Pesos or less (about US$150,000) then you pay ZERO annual real estate taxes. 

If the home is worth more than that amount, you pay 1% (one percent) of the value over and above RD$5 Million Pesos (over and above US$150,000).  If your purchase raw land or undeveloped land, then in that case there is an annual property tax calculation regardless of the value. 

The best place to buy real estate

The decision as to where you might want to purchase a home, farm or apartment of course comes down to you, in terms of lifestyle choices. 

The Dominican Republic offers miles of typical idyllic Caribbean beaches, but also the highest mountain range in the Caribbean as well (Pico Duarte).  In fact, there is a section of the country that is called the Alps of the Caribbean, complete with cooler climate, pine trees and ferns similar to what can be found in the US New England states. 

Apart from that, there are the metropolitan areas of Santo Domingo (the capital city with a population of about 3.8 Million people) and the second largest city, Santiago (with a population of about 1 Million).  Many people are very surprised at what is available in these metropolitan areas. Modern stores, supermarkets, shopping malls, movie theaters (new films in English, albeit with Spanish Language subtitles) and a whole lot more.  In short, if you wish to live in or near a modern urban area with these type of stores and services - it certainly is available. 

Ms. Maldonado is affiliated with Ascot Advisory Services