When analyzing real estate alternatives in the Dominican Republic, there are many things to consider. First is the “Rent vs. Buy” analysis. If this favors “Buying Real Estate in the Dominican Republic”, then the next step is to estimate annual usage of the real estate investment. Generally speaking, if months of residence in the DR exceeds six months during any given year, then a private villa could be considered. On the other hand, if months spent in the DR are forecast to be less than six months a year, then condominium living is a great alternative. The final consideration depends on whether the property will be put into rental services — or it will be used for personal use only.
Whatever the case, “Taxes” should always be taken into consideration when investing in real estate. One benefit to owning property in the Dominican Republic is that property taxes are generally lower than other resort areas around the world. As a side note: “Title” to real estate in the Dominican Republic can be held under a personal name or in a company name, so please let us know if you have questions about this. We have associates that can offer legal advice on this issue. The remainder of this article talks about the benefits of buying real estate with “Confotour Approval”.
Purpose of the Law
The “Tourism Incentive Law No. 158-01” was created to promote tourism development in areas in the Dominican Republic that have great potential as new or existing tourist destinations. It is aimed at areas that have not yet reached their expected potential as thriving new communities of international investors. This law and its associated regulations establish incentives for investments in the designated areas and are meant to be a legitimate stimulus to reach the country’s goals and objectives for tourism development.
Confotour Requirements for the Developer
Real Estate Developers in the Dominican Republic have extensive hurdles to jump in order for their project to get “Confotour Approval”. It is a lengthy and expensive process and developers who receive approval are to be congratulated. It is a real accomplishment — and at the same time — a real benefit to the Buyers’ of the development. To achieve the end result, the project has to comply with all the regulations of construction requirements which are covered covered under the UMBRELLA OF THE CONFOTOUR LAW.
- Approved Site Plans
- Approved Architectural Plans
- Environmental Approval
- Minister of Tourism Approval
- City Hall (Local) Approval
- INAPA (Water Supply Department) Approval
- CODIA (Engineer-Architect Union)
- Approval Public Works Approval
Additional Requirements to Receive Confotour Benefits Under Law 158-01 are:
The Project must include a tourism operation that attracts new investors. The Project should be well financed and fundamentally secure. The Project should be financially viable with a profit margin between 20% and 25%. The Project Quality should abide to International Standards.
Normal Taxation Without Confotour Approval
Without approval, all taxes are based on the assessed value of the real estate. Transfer Tax – If a property you want to purchase has a value of US$100,000.00, for example, you would have to pay a single payment of 3% of the property value (US$3,000) upon the transfer of title. Property Tax – This tax is an annual payment of 1% of the property value over and above RD$ 7,438,197.00, which is about $148,000 USD. For example a property valued at US$200,000 would pay an annual tax of $520 USD. Income Tax – This tax is an annual payment of 20% of Rental Income Earned from renting out the real estate investment.
Taxes with Confotour Approval
0% Transfer Tax – Exempt from paying 3% transfer tax.
0% Transfer Tax – Exempt from paying 1% property tax over the tax base amount.
0% Income Tax – Exempt from paying 20% income tax on rental income received.
15 Year Benefit – The above exemptions run for a period of 15 years.
So the benefits of buying a property with Confotour Approval are substantial. This is exciting because there are multiple new projects coming online with Confotour Approval on the north coast of the Dominican Republic in such places like Las Terrenas, Samana, Las Galeras, and other locations around the Samana Peninsula.