FREQUENTLY ASKED QUESTIONS
As with purchasing property anywhere in the world there will be some stress and many questions, we will be there with you every step of the way offering you peace of mind. From starting your search to bringing the wine at the house warming party we be there looking out for you. Please feel free to email or call us if you have more questions you would like answered.
Yes, anyone can come to this country without the need for residency and buy property. Tourists must fulfill the same requirements as Dominicans and legal foreign residents in the Dominican Republic. The Dominican government, though, requires that the Title Registry Offices keep a record, for statistical purposes, of all purchases made by foreigners.
The risk is small if the persons involved in the real estate transaction (developer and real estate attorney) are reputable. The major risk is that you may be issued a title that does not reflect the liens and charges that may encumber the property, or that it may not reflect the real owner of the property. This can be avoided if you secure a reputable firm that will ensure that a title search gets done certifying the actual status of the property. Blue Sail Realty works with one of the most respected law firms on North Coast, We guarantee that before purchasing a property your title will be fully checked and cleared.
When purchasing property in the Dominican Republic you should also be aware of the zoning, or lack of zoning, and who your neighbors are or could be in the future. Like with any property purchase decision, try to envision what factors that could lead your property to gain or lose value in years to come.
If the purchase is done through a Savings and Loan Association (Asociación de Ahorros y Préstamos) total closing costs amount to approximately 2.5% of the purchase price, including legal fees.
For a straight purchase from an individual to another, total closing costs come up to approximately 6% of the purchase price: approximately 5% for transfer taxes and 1% for legal fees.
Dominican Republic Property taxes (“IVSS” taxes) are levied on sumptuous homes and unbuilt city lots. Unbuilt city lots of any value pay at an annual tax rate of 0.50% of appraised value. Sumptuous homes pay at a 0.25% p.a. tax rate. Any home worth more than RD$1,400,000 pesos (approx. US$85,000) is considered “sumptuous” for tax purposes. Homes worth less than RD$1,400,000 pesos and commercial buildings are exempt from property taxes. The government penalizes late payment with a 10% tax due for the first month and 4% for each subsequent month.
What you need will vary with the institution and with the form of purchasing. The minimum you will need is: Two forms of official photo ID, one being your passport. If you plan to finance the property, some type of official document is required to disclose your income. This could be copies of last years income tax filing, a letter from your present employer on company letterhead (if you plan to move and work in the DR, get a letter of intent from your prospective new employer, noting start date, length of employment and salary); documents of other sources of income; savings and checking statements; outstanding debts and proof of on-time payments. You should bring anything you can to prove your solvency. You will also need to show plans of the house/building you wish to build or copies of the title of the property you wish to buy. It’s not much different from buying property in the US.
Officially, the metric system should be used in all real estate transactions, the hectare (10,000 m2 = 2.47 acres) being the basic unit. However, the “tarea”, a unit of measurement from colonial times equivalent to 628.86 m2 is still widely used. An acre is equivalent to approximately 0.4 hectares or 4004 m2 or 6.4 tareas.
Other land measurements are:
1 M sq = 10.795 sq ft
1 Tarea = 629 m2
6.433 Tareas = 1 acre
15.89 Tareas = 1 Hectare
1 Hectare = 2.47 acres
1 acre = 43, 560 sq ft
Usually the vendor/seller pays the commission. But there are many occasions when the seller will stipulate that his price is a net price and therefore the buyer will in effect compensate the real estate broker for his work.
To transfer the title from one individual to the next, there are transfer taxes. The buyer/purchaser pays approximately 5% of the declared value. (Not the sales price) so lower than the sales price.
The custom is that the lawyer for the buyer makes the contract and thus the buyer pays for that, sometimes the seller wants a lawyer to represent his interests so he will have to pay too.
Most loans and savings banks will finance up to 80% of the loan in a real estate purchase in the Dominican Republic. In the past, despite the high interest rates, purchasers of real estate have had the advantage of the devaluing peso, so in the long run their real interest rate has been much lower. While you will pay less by financing the property abroad, in the long run if you take out a long mortgage locally you may end up paying less.
If you are not financing through a loans and savings bank, you may be asked to make a bigger down payment.
The main advantage to forming a Dominican company to purchase real estate in the Dominican Republic are that you will not be personally liable for debts or problems incurred during the operation of the business. A second very important reason to incorporate is to avoid the application of Dominican rules of inheritance to your Dominican properties. Inheritance of real property in the Dominican Republic is governed by Dominican law which provides for “forced heirship”: part of the estate must go to certain heirs by law. For example, a foreigner with a child must reserve 50% of the estate to that child despite the existence of a will or of the law of his country of residence. A third advantage is to avoid having to put up a bond in case you (a foreigner) have to sue in the DR.
Over the years real estate investments in the Dominican Republic have proven to be good business for many. In many areas, such as Casa de Campo, Cabarete, and select areas of Puerto Plata, values in foreign currency have never gone down, only up.
If you have plans to live in the Dominican Republic for a short term, consider renting property in the Dominican Republic. This gives you the flexibility of changing where you are living. However, if you are interested in participating in the real estate appreciation potential that the Caribbean offers, then you may want to consider purchasing real estate property in the Dominican Republic as it offers you a price point considerably lower than most other Caribbean Islands.
The usual well-intentioned advice is that if you are not familiar with the area or the Dominican Republic, you should first rent until you do or have a trustworthy consultant or real estate agent that can present real estate opportunities in the Caribbean. We at Blue Sail Realty have helped many families relocate here from all around the world. Helping them find the perfect spot, whether Villa or Condo.
Keep in mind that if you buy and then have to leave the country, there is always the option of putting purchased property on the rental market. At Blue Sale Realty we offer a turn key solution to your real estate needs. We will help you find your dream home and if you would like to rent it out, be it short term or long term, we will manage your property for you as if it were our own, protecting your investment for you. This is a practice that helps pay for the mortgage of your Caribbean vacation home.
Realtors in the Dominican Republic normally charge between 6%-10% commission. This is negotiable most of the time.
Yes, foreigners can obtain loans. However, most savings and loan will require residency status.
