Everything You Need To Know About Buying and Selling Property in The Dominican Republic

by Katie Florence

Everything You Need To Know About Buying and Selling Property in The Dominican Republic

The Dominican Republic is a beautiful Caribbean nation with a vibrant culture and stunning natural beauty, making it an attractive location for real estate investment. However, as with any property investment, there are important factors to consider when buying and selling properties in the country. In this article, we will explore everything you need to know about the process for buying and selling properties in the Dominican Republic, including legal advice, financing, and more.

Legal Advice

The first step in buying or selling a property in the Dominican Republic is to seek legal advice. Working with a local attorney who is experienced in Dominican Republic real estate law is crucial to ensuring that the transaction is legal and legitimate. They can assist you with the negotiation and drafting of contracts, help you understand the local laws and regulations, and provide guidance on the necessary paperwork and legal requirements. But don’t worry, we can help you with that, as we only work with the most reliable and knowledgeable lawyers in the area!

Financing

If you plan to finance your property purchase, it is important to research the available financing options in the Dominican Republic. While there are several banks and financial institutions that offer financing for real estate investments, it is important to do your due diligence and choose a reputable lender. Be prepared to provide financial information and documentation to the lender, including proof of income and employment, credit reports, and bank statements.

In addition to traditional bank loans, some developers in the Dominican Republic offer financing options for buyers. These financing options may have more favourable terms than traditional bank loans, but it's important to carefully review the terms and conditions before signing any agreements.

For example, with local reputable bank ScotiaBank, you need the following to be considered for a mortgage:

- 660 minimum credit score for Canadians, 680 for USA citizens

- Last 2 years of income tax returns

- Proof of employment

- 35% minimum debt ratio (i.e. you need to have more assets than debts)

- 1:1 net worth (i.e. assets must be greater or equal to your liabilities)

- Copy of valid passport

- Bank reference from primary bank

Ideally you will need to sign the agreement in person but could also arrange for someone to sign on your behalf (power of attorney).

If you are not from Canada/USA, you may still be eligible and further additional documents may be required depending on your nationality.

If pre-qualifying for a loan for a new construction, you will need to fill out an online form and on average, 99% of the applicants will be approved for a loan.

For any further questions, please do get in touch with our local expert who will be able to guide you every step of the way.

Title and Ownership

Before purchasing a property in the Dominican Republic, it is important to verify the title and ownership of the property. Working with a local attorney can help ensure that the property is properly titled and registered with the Dominican Republic's land registry. They can also assist with obtaining a certificate of ownership and verifying any liens or encumbrances on the property.

Taxes and Fees

As with any property investment, there are taxes and fees associated with buying and selling real estate in the Dominican Republic.

These are the normal transactions costs associated with a property purchase:

- Transfer Tax (3%)

- Document Stamp Tax (1.3%)

- Notary Fee (0.25-1%)

- Real Estate Agent Fee (depending on your agreement, usually between 5-10%)

Incentives for Foreign Investors

Thankfully, there are no restrictions for foreigners purchasing properties in the Dominican Republic and foreign investors can benefit from these incentives when investing in a property here in the country:

- 50% exemption on property tax fees

- 50% exemption on taxes of their mortgages if the foreign buyer has a mortgage with a lending institution regulated by local financial law

- Exemption from property taxes when the property transfers ownership

- 10 years exemption for all national and municipal taxes for developers, which includes transfer tax of ownership for the first property buyer (Law 158-01 on Tourism Incentive)

- Tax exemption on personal and household items

Need more reasons? Then keep reading!

Selling a Property

If you are selling a property in the Dominican Republic, it's important to work with a reliable and expert real estate agent who can help you market the property and find potential buyers. Your agent can also guide you through the process of negotiating the sale price and handling the paperwork and legal requirements associated with the sale.

Why is the Dominican Republic one of the most popular destinations in the Caribbean for real estate investment?

- The average price of a house in the Dominican Republic is significantly lower than in many other Caribbean destinations, making it an affordable option for those looking to buy property.

- The Dominican Republic is one of the few countries in the world where you can buy property directly on the beach.

- The Dominican Republic has a number of tax incentives and exemptions for foreign investors, making it an attractive option for those looking to invest in property.

- The real estate market in the Dominican Republic has been growing steadily in recent years, with a particular focus on luxury and eco-friendly properties.

- Some of the most popular areas for real estate investment in the Dominican Republic include Punta Cana, Cabarete, and Las Terrenas.

- The Dominican Republic has a large expat community, and many foreigners choose to buy property in the country as a second home or for retirement.

- The Dominican Republic's real estate market has been largely unaffected by the COVID-19 pandemic, and continues to be a popular destination for investment and tourism.

Want to find out more, or have more questions?

Get in touch with our locally based agents here at the Agency to find you the perfect property for your budget and needs, we are here to help!

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