Before buying property in the Dominican Republic
Investing in the Dominican Republic
Upon arrival in the Dominican Republic, you may see places that advertise properties around the particular destination you are visiting. Be careful to take the time to investigate properties all over the area you are interested in, as properties that are advertised do not necessarily reflect the true market value of all available properties. Knowing how real estate purchases work in the Dominican Republic, what's involved, the other costs that may be associated, what questions to ask, etc., will help ensure you make an informed purchase decision.
You may hear that when a foreigner purchases property in the Dominican Republic, there are no annual real estate taxes and/or no title transfer taxes. Neither of these statements are completely true. Depending on the property purchased, as well as how it is purchased, there may or may not be an annual real estate tax liability and a title transfer tax. There are situations where tax exemption can occur, but it is important to find out where this is legally the case. The best thing to do is to speak with Real Estate Agents/Agencies or Attorneys/Law Offices to learn what your options are for the particular property you are interested in purchasing.
If you decide to purchase directly from the owner, there are some things that you should keep in mind. There is no real estate or governmental body that sends real estate and property tax reminders to owners if these fees have not been paid. If an owner does not pay these dues, the government will ensure they collect any arrears at the time of sale, if not up to an additional 50% penalty on these arrears as well, before enabling the title of the property to be transferred. This could prevent the sale from happening if the seller does not have the money to pay these arrears (and any penalties), or, depending on what has already been transacted between the buyer and the seller, put the buyer in a position to pay any outstanding dues before obtaining title of the property. To prevent this from happening, ask the seller to provide proof of the previous tax payments that have been made on the property.
A seller should always be able to provide you with at least a photocopy of the title to the property so that you can verify with the titles office that the title is good and that there are no liens against the property. It is also wise to have the seller provide a recent copy of the tax assessment of the property, matching it against the title to ensure it fully describes the property and all of its buildings. If the title office has only registered the piece of land, and a home or building was built afterwards without being registered, you could be liable for the arrears in taxes on this home or building since it was built.
If you are looking into purchasing a new residential property, the developer may not be able to provide you with anything but a photocopy of the 'master title' for the entire development. This is okay, but you will need to also complete a 'contract of sale' if you decide to purchase, to make your purchase legal and binding. Ensure the 'contract of sale' is notarized by an Attorney and is filed properly with the applicable department. Once the entire project is completed, the developer cancels the 'master title' in exchange for providing individual land titles to each of the project's buyers. Once the development is completed, the developer should provide you and all other buyers with an individual land title for your portion of the project, but to be sure, at the time of sale, along with the 'contract of sale', you should get an agreement in writing from the developer stating he will provide your individual land title in no longer than one year's time. If the developer is unwilling to do so, you should be skeptical about buying the property.
If you are a first time buyer in the Dominican Republic, it would probably be in your best interest to gain the assistance of a Real Estate Agents/Agencies or Attorneys/Law Offices to assist you with your purchase to ensure all of the particulars have been addressed in order to avoid future surprises.
Please note: Hispaniola.com is not involved in Real Estate and does not have the expertise necessary to provide you with any and all of the information you may need before investing/purchasing real estate in the Dominican Republic. Laws are also subject to change. Hispaniola.com recommends you take the time to become fully aware of any applicable laws and details regarding purchasing real estate in the Dominican Republic, either yourself, or through the assistance of a Dominican Republic Real Estate Agent or Attorney.