Real Estate Transactions in Punta Cana, Dominican Republic.
Real estate transactions in the Dominican Republic are governed by the Property Registration Act No. 108-05 and its Rules of Procedure, in force since April 4, 2007. Ownership of the property is documented by “Title Certificates” issued by the Title Registry Offices.
Below we have described the steps to buy a property in Punta Cana, Dominican Republic.
Steps Involved in a Real Estate Transaction in Punta Cana, Dominican Republic
• Initial Steps: In order to purchase real estate in Punta Cana, Dominican Republic, the buyer and seller must first verbally agree on a price. Then, an attorney (solicitor) or notary public will draft a legally binding Promise of Sale, which must then be signed by both parties. (In Dominican Republic, notaries must hold a law degree.)
It is advised that the potential buyer hire a real estate legal advisor to serve as solicitor before signing any contracts or paying a deposit because of some unique aspects of Punta Cana, Dominican Republic real estate law.
Steps to buy a property in Punta Cana, Dominican Republic:
• Asking for help from a lawyer is the key to Due diligence in Punta Cana before starting any real estate process, it’s important to do your homework before you buy a property in Punta Cana or any other city in Dominican Republic, make sure you’re aware of any potential risks involved. By asking for help from a lawyer for conducting an investigation into the property and the market, you can minimize your chances of making a costly mistake.
• Promise of Sale: This official document, which both parties must sign in front of a Punta Cana Notary Public, is legally binding. Practically speaking, it is more significant than the Deed of Sale since it typically includes a thorough and detailed account of the entire transaction up until the point at which the full purchase price has been paid and the property is prepared to be transferred to the buyer.
• Deed of Sale (“Contrato de Venta”): Both parties must sign this official document in the presence of a notary public with legal power in Punta Cana, Dominican Republic in order for it to be legally enforceable. It is mostly employed to transfer ownership of the property from the seller to the buyer.
• Calculation and Payment of Transfer and Registry Taxes: The verified Deed of Sale is brought to the closest Internal Revenue Office where a request is made for the property’s assessment. The Internal Revenue Service of Dominican Republic chooses an inspector to do the appraisal and verifies that the seller is in compliance with his tax responsibilities.
• Filing at the Registry of Title: After the property has been valued and taxes have been paid, the seller’s deed of sale and certificate of title, along with the supporting paperwork provided by Internal Revenue, are submitted to the Title Registry Office for the area in which the property is situated.
• Certificate of Title: The sale is registered at the Title Registry Office, where a new Certificate of Title is then issued in the buyer’s name. As soon as the transaction is registered at the Registry, the buyer becomes the legal owner of the property. Depending on the Title Registry Office where the sale was recorded, it could take a few days to a few months to issue the new Certificate of Title.
Taxes, Costs, and Legal Costs Associated with Property Transfers in Punta Cana, Dominican Republic
After completing the steps to buy a property in Punta Cana, Dominican Republic and before filing the purchase at the Title Registry Office in Dominican Republic, taxes must be paid. Taxes related to the transfer of real estate is 3% of the property’s government-approved valuation and are broken down as follows:
- 3% Transfer Tax (Law # 288-04)
- Minor costs include the cost of a certified check, which is needed to pay taxes to Dominican Republic Internal Revenue, as well as various stamps and registry tips.
Taxes are paid according to the property’s market value as established by the taxing authorities, not according to the purchase price specified in the deed of sale.
Depending on the intricacy of the transaction, the normal legal cost for real estate transactions is 1 to 1.5 percent of the gross purchase price, with a minimum fee for properties priced at $150,000 or less and a discount for properties valued at more than $1 million.
Real estate taxes in Dominican Republic
Individuals who possess real estate in Punta Cana, Dominican Republic are subject to a 1% annual tax depending on the total value of all their properties as determined by government appraisers. Properties are appraised without taking into account any furniture or other items that may be present.
The 1% is only taken into account for built parcels with values greater than $7,019,383.00 DOP (about $150,000.) The 1 percent tax is computed on the actual appraised value of unbuilt parcels without the exemption.
In Dominican Republic yearly real estate tax is payable on or before March 11 of each year, or it can be split into two equal payments with the first due on or before March 11 and the second due on or before September 11.
Every year, the exemption’s value is increased to account for inflation.
Farm properties, homes held by people 65 years of age or older without any other real estate in their name, and properties owned by businesses that pay a separate tax on their corporate assets are all free from real estate tax.
Real Estate Purchases Made by Foreigners in Punta Cana, Dominican Republic
Foreigners are free to purchase real estate in Punta Cana, Dominican Republic without any limitations.
Decree 21-98 of January 8, 1998, abolished any foreigners regulation on acquiring real estate in Dominican Republic and established as the only requirement that the Title Registry Offices keep a record, for statistical purposes, of all purchases made by foreigners.