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Real Estate Taxes in the Dominican Republic: IPI, Capital Gains, and Transfer
Understanding the real estate taxes in the Dominican Republic is essential for every professional real estate agent. Your clients rely on you to advise them correctly about the tax costs of buying, selling, or maintaining a property.
In this guide, we explain each tax, who pays it, how much it costs, and the available exemptions.
1. Property Tax (IPI)
The IPI is an annual tax paid by individuals who own properties whose total value exceeds a threshold established by the DGII.
- Rate: 1% annually on the amount exceeding the exempt threshold
- Exempt amount 2026: Approximately RD$9,860,649 (adjusted annually for inflation)
- Who pays: Individuals. Companies pay the Asset Tax (1% on total assets)
- Deadline: Paid in two installments: March and September of each year
Practical example: If a client has properties valued at RD$15,000,000, they pay 1% on RD$5,139,351 (the difference) = RD$51,394 per year.
IPI Exemptions
- Low-cost housing up to RD$4,438,070
- Improvements on rural land dedicated to agricultural activities
- Properties owned by the State
- Properties covered by the CONFOTUR Law (temporary exemption)
2. Real Estate Transfer Tax
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Each time a property is transferred, the buyer must pay:
- Rate: 3% of the property value
- Tax base: The higher of the declared sale price and the reference value from the DGII
- Who pays: The buyer (by law, although it can be negotiated)
- Deadline: Within 6 months after the sale transaction
3. Capital Gains Tax
If a seller makes a profit from selling (sale price higher than purchase price), they must pay:
- Rate: 27% on the net gain (individuals and corporations)
- Calculation: (Sale price - Purchase price adjusted for inflation - Documented improvement expenses) × 27%
- Declaration: It is included in the annual income tax return (IR-1 or IR-2)
4. CONFOTUR Law: Exemption from Tourist Taxes
The Law 158-01 for the Promotion of Tourist Development (CONFOTUR) offers significant tax benefits for projects in tourist areas:
- IPI exemption: Up to 15 years
- Transfer exemption: 3% eliminated on the first sale
- Income Tax exemption: For the developer
- Eligible areas: Punta Cana, Bávaro, Samaná, Las Terrenas, Juan Dolio, La Romana, Bayahíbe, Jarabacoa, Constanza, among others
For agents operating in tourist areas, CONFOTUR is a powerful selling point. You can highlight the tax savings for foreign investors in your listings of apartments for sale in Punta Cana o properties in Las Terrenas.
Summary Table of Taxes
| Tax | Rate | Who Pays | When |
|---|---|---|---|
| IPI | 1% annually | Owner | March and September |
| Transfer | 3% | Buyer | Upon transfer |
| Capital Gains | 27% | Seller | Annual declaration |
Frequently Asked Questions
Can I deduct the IPI if I rent my property?
Not directly. However, rental income is reported as taxable income, and expenses related to the property (maintenance, insurance) are deductible from income tax.
What happens if I inherit a property, do I pay transfer tax?
Inheritances do not pay the 3% transfer tax, but they are subject to the Inheritance and Donation Tax (3% of the value of the inherited estate) administered by the DGII.
Does CONFOTUR apply to resale properties?
Generally, CONFOTUR benefits apply only to the first sale from the developer to the end buyer. Subsequent resales are subject to regular taxes, although the IPI exemption may remain in effect for the remaining period.
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