Frequently Asked Questions
How do you own property - in your personal name or in a corporate name?
You can choose either way. No matter which way you own the property, personal name or corporate, you own that property outright with your tittle.
If a property is owned in a corporate name, can it be assignable?
Yes, you can transfer shares of the corporation to a new owner. The new owner can be another corporation or trust.
Will I pay property tax on a yearly basis? How does the government determine the taxable amount?
Yes, property tax is called “IPI” tax. It is approximately 1% of the assessed value of the property that is determined by the amount of square meters of the property and its appraised value. If the property is owned by the corporation, the applicable tax is tax over assets or 25% over its net income. Companies that only own property are generally subject to the 1% tax over its assets and the asset is normally the real estate.
Do you get a deed at closing? Is there a Transfer Tax?
If the transaction is a transfer of real property, the seller must provide you with the Deed of Tittle Duplicate of Owner, in spanish is the Certificado de Titulo Duplicado del Dueño) along with other documentation required to record the transfer at the land registry. Before you record the transfer of tittle you must pay your transfer taxes (3% of the value of the property) at the Department of Internal Revenue which issues a receipt evidencing you have paid. If the transaction is a transfer of shares then the seller must provide you with the shares and the Deed of Tittle Duplicate of Owner.
Do you need tittle insurance?
It is not customary but is it available through Stewart Title services and other agencies.
What are typical closing costs? How much is the Transfer Tax?
Closing costs will be your attorney’s fees. The transfer tax is 3% of the value of the property.
Does financing impact the closing?
Sellers do not require local financing. Banks will require appraisals in order to approve the loans and if financing has been pre-approved it should not impact the closing.
Is there a due diligence period where you can inspect the property before putting down a deposit?
It is common in the Dominican Republic to perform due diligence on the property. Purchasers want to make sure the property is free of liens and encumbrances, the seller is up to date in payment of property tax, that the surface area of the property is what the seller says it is.
How do you apply for tax exemptions?
An attorney can find out if you qualify for tax exemptions and how it is paid.