9 Questions to Ask BEFORE Buying REAL ESTATE in the DOMINICAN REPUBLIC
Are you thinking about buying Real Estate in the DOMINICAN REPUBLIC?
It’s normal to have many questions about where to start, what are the best strategies, or where to find the best deals when buying real estate in the DOMINICAN REPUBLIC?
If you’re looking for real estate advice before you purchase your next property in the DOMINICAN REPUBLIC, this guide will point you in the right direction. Here are 9 great questions to ask and get started on the right foot:
1. CAN A FOREIGNER BUY REAL ESTATE IN THE DOMINICAN REPUBLIC?
YES a foreigner can buy real estate properties in the DOMINICAN REPUBLIC, and all that is required is a valid passport & drivers license.
Formerly, Decree 2543 of March 22, 1945 and its amendments required that foreigners obtain prior Presidential approval except in certain cases. Decree 21-98 of January 8, 1998, abolished this regulation and established as the only requirement that the Title Registry Offices keep a record, for statistical purposes, of all purchases made by foreigners.
2. CAN FOREIGNERS INHERIT REAL ESTATE PROPERTIES IN THE DR?
There are no restrictions on foreigners inheriting title to real property in the Dominican Republic. Inheritance taxes have been recently lowered to 3% of the appraised value of the estate. Inheritance of real estate is governed by Dominican law which normally provides for “forced heirship”: part of the inheritance must go to certain heirs by law. Nevertheless, a new conflict of law statute, enacted in December 2014, allows foreigners to have their national law determine the rules of inheritance in connection with real estate located in the DOMINICAN REPUBLIC. For this reason, it is strongly recommended that non-Dominicans who purchase Dominican real estate seek legal advice on how to benefit from this provision.
3. ANY RESTRICTIONS FOR FOREIGNERS BUYING PROPERTY IN THE DR?
There are NO restrictions or limitations on the type or amount of properties a foreigner can buy in the DOMINICAN REPUBLIC. Actually, as a foreigner you have the same benefits and privileges as Dominicans buying property in their country.
As a foreigner, you have the same rights and privileges as Dominicans with regards to buying & owning real estate in the DOMINICAN REPUBLIC, including the benefits of tax incentives such as the CONFOTUR Law (click for details).
As a foreigners, all you need to buy property in the DOMINICAN REPUBLIC is a valid passport and driver's license.
As a foreigner, the title of the properties will be in your name for life i.e. until you chose to sell the properties or to pass them on to your heirs.
4. HOW TO CHOOSE THE RIGHT REAL ESTATE COMPANY OR AGENT TO WORK WITH?
People often make the mistake of thinking that working with several realtors simultaneously is beneficial in having access to more properties and options. In the DOMINICAN REPUBLIC nothing could be further from the truth! The fact of the matter is that here properties are rarely listed exclusively with one broker, so all agents basically have access to the same properties. Therefore, instead of running around with different realtors seeing the same properties, it is recommended to work with 1 REALTOR in order to simplify the process for the buyer and make it more effective - but the question then becomes "how to chose THE RIGHT 1?"
Here are the rules to follow in order to chose the right real estate agent:
Chose a real estate agent you feel comfortable with.
Chose a realtor who speaks your language.
Chose an agent who understands your needs.
Chose a realtor who is knowledgeable and resourceful.
Be aware that basically everyone on the streets of the DR will try to make you believe they are a real estate connoisseur, and the best person to help you purchase property in the DOMINICAN REPUBLIC.
A professional real estate agent should start by having a professional business card, and a professional appearance. To serve the international market effectively, the right agent should at least speak Spanish and English fluently and correctly. As far as working with a REAL ESTATE COMPANY, it is usually better in the DR a local agency that is resourceful and can insure that the transaction goes smoothly, as opposed to an international real estate franchise that operates under the guidelines of foreign nations and cultures.
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To know more about how our team of Professional Realtors can help you please call us directly at +1-809-763-4400 (WhatApp).
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5. WHAT IS THE BEST PLACE TO BUY PROPERTY IN DOMINICAN REPUBLIC?
There are several great areas and cities throughout the DOMINICAN REPUBLIC to buy property, but the best place to buy property depends on the buyer's needs, wants, and plans. For example if the plan is to buy a nice vacation home by the beach in a peaceful area close an international airport and good hospitals, than PUNTA CANA, LAS TERRENAS, PUERTO PLATA, SOSUA, CABARETE will be the best places to buy property; If the plan to come retire and live in the mountains enjoying a nice garden with beautiful flowers, but yet be close to a major city with good hospitals and an international airport, than JARABACOA will be the best place to buy property. However, if the objective is to be in a major city in the middle of the action, than SANTO DOMINGO and SANTIAGO are the best places to buy property.
However, if the plan is to buy a investment properties to put on short-term rental like AIRBNB, than the best place to buy is where there are the most tourists which in the DOMINICAN REPUBLIC it is PUNTA CANA. If it is commercial properties like gas stations, super markets, shopping plazas, or stores, than any of the above mentioned cities will be a good place to buy property i.e. it will depend on the exact location inside the city which we will help you find the perfect one for your type of business.
6. CAN A FOREIGNER GET A MORTAGE FROM A DOMINICAN BANK?
It is possible for foreigners to get a loan or a mortgage in the DR, but it is not easy. From experience it can be said that mortgage loans are usually easier obtained by American, Canadians, and European from banks like BHD LEON, SCOTIA BANK, and ASSOCIACION CIBAO DE AHORROS Y PRESTAMOS. However keep in mind that interest rates in the DOMINICAN REPUBLIC are often much higher than those in the US, where the interest rate on a 10 year loan is usually above 10% per year. Furthermore, the maximum financed is usually 70% of the purchase price. It is a good idea to get pre-qualified for the mortgage before looking for properties, but the final approval of a bank mortgage will depend on the specific property to be financed. In terms of the required documents, the following are usually the ones requested for a mortgage application in the DR:
Copy of passport
Copy of driver's license
Copy of previous two years tax returns
Copy of past three to six months bank statements
Employment letter (if applicable)
7. IS IT BETTER TO BUY PROPERTIES UNDER A COMPANY OR AN INDIVIDUAL?
Buying a property under a company name does protect the property in certain ways, but it does come at a cost! First, if the company has not been formed yet, there is the cost of forming the company which usually is between $1,000 and $2,000. Then, if the company is profitable it will be taxed at a rate of 27%. Whether or not the company is profitable, it is required by law to file monthly tax forms, and certain taxes are to be paid regardless in addition to property taxes if applicable. Properties that are purchased under names of individuals are subject the annual property tax of 1% of the value of the property estimated by the government for in excess of US$147,000. There are exceptions for unbuilt lots and farms outside city limits, and properties whose owners are 65 years old or more who have had them registered to their names for more than 15 years and have no other properties.
8. WHAT ARE THE CRITERIAS TO FILL FOR RESIDENCY IN THE DOMINICAN REPUBLIC?
The following applicants may apply immediately for permanent residency status without having to previously obtain temporary residency status:
Investors of at least 200,000 USD in local businesses (including free zones and government contracts) or in local financial instruments.
Retirees with a monthly pension of at least 1,500 USD (plus 250 USD per dependent).
Applicants with monthly income of at least $2,000 for five years or more.
Applicants related to Dominicans or to foreigners with permanent residency status in DR (spouses and children). The application process is essentially the same for both temporary and permanent residency, except for some additional documents required in permanent residency applications.
ELIGIBILITY CRITERIA
Property owners with rental income, investors, and retirees are eligible to apply for residency on an expedited basis if certain income requirements and other specific criteria are met. The term used to describe this status is “Investment Residency,” and is not always easy to obtain. The foreign national must submit the same documents required for the normal residency process, and additional documents that evidence the foreign national’s eligibility for Investment Residency.
PROPERTY OWNERS WITH RENTAL INCOME
Income may be derived from rental property anywhere in the world.
Income must be a minimum of US$2000 per month. An additional income of US$250 per month per minor in the immediate family and spouse accompanying the applicant must be added.
Proof of rental income evidenced by an official document such as a lease must be certified, authenticated, and translated into Spanish for submission to the Immigration Department.
INVESTOR CRITERIA
The investment must be US$200,000 or more.
The investment may be direct or indirect, for example, a real estate transaction, a deposit in a bank account, or an investment in a project in the Dominican Republic.
The investment must be registered in the Dominican Republic, evidenced by a Certificate of Investment. Regulation 214-04 on Foreign Investment Registration stipulates the criteria for registering investments with the Department of Export and Investments (CEI-RD). The CEI-RD issues a Certificate of Investment approximately one month from the date of application, and the Certificate must be regularly renewed. The holder of a valid Certificate of Investment can sponsor immediate family members, if an individual, or company employees, if a corporation, for expedited residency.
RETIREE CRITERIA
Income must come from a public or private plan providing retirement income.
Income must be at least US$1,500 per month. An additional income of US$250 per month per minor in the immediate family and spouse accompanying the applicant must be added.
Proof of retirement income must be certified by the plan provider, authenticated, and translated into Spanish and submitted to the Immigration Department.
9. IS IT REQUIRED TO HAVE AN ATTORNEY TO FILE FOR RESIDENCY IN THE DR?
Having an attorney is NOT required in order to file for residency in the DR, but it is highly recommended in order to avoid costly mistakes! Attorney fees vary based on the individual case.
DISCLAIMER:
We are NOT Accountants or Attorneys, and are NOT hereby providing professional advice regarding tax issues or residency in any way - for such advice or counseling we recommend that you consult with Licensed Accountants and Attorneys. If you need a recommendation let us know using the form below, and we will gladly refer you.