Navigating the tax landscape of a foreign country can be daunting, but it doesn’t have to be. The Dominican Republic offers a straightforward and favorable tax environment for international real estate investors. Understanding the key taxes — the one-time transfer tax, the annual property tax (IPI), and potential exemptions — is crucial to making a smart investment and avoiding surprises.
This guide breaks down everything you need to know about property taxes in the Dominican Republic as a foreign buyer in 2026. We’ll cover the main taxes, explain valuable exemptions like CONFOTUR and the 65+ rule, and provide a clear picture of what to expect when buying, owning, and selling property in this Caribbean paradise.
“Many foreign buyers are pleasantly surprised by how simple and advantageous the Dominican tax system is. Unlike many countries, the DR welcomes foreign investment with equal rights and clear rules. Knowing these rules is the first step to a successful and profitable investment.”
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The Three Main Taxes for Property Owners
When you buy property in the Dominican Republic, you’ll encounter three primary types of taxes during the ownership lifecycle: the property transfer tax (paid once at purchase), the annual property tax (IPI), and the capital gains tax (paid when you sell). Here’s a quick overview before we dive into the details:
| Tax | Rate | When It Applies |
|---|---|---|
| Property Transfer Tax (IPDT) | 3% of DGII-assessed value | One-time, at purchase |
| Annual Property Tax (IPI) | 1% above ~RD$9.86M threshold | Yearly |
| Capital Gains Tax | 27% of net gain | When you sell |
1. Property Transfer Tax (IPDT)
This is a one-time tax paid to the Dominican government (DGII) to transfer the property title from the seller to your name. The rate is 3% of the property’s market value as assessed by the DGII. It’s important to note that this assessed value is often lower than the actual purchase price, which can work in your favor [1].
The buyer is responsible for paying this tax, and it is due within six months of signing the final purchase contract. There are no additional transfer taxes or surcharges for foreign buyers — the 3% rate applies equally to everyone. The most significant exemption to this tax comes from the CONFOTUR law, which we’ll discuss below.
2. Annual Property Tax (IPI)
This is the yearly tax on real estate assets, and it’s a relatively low tax with a generous exemption threshold. The rate is 1% of the property’s value that exceeds approximately RD$9,860,787 (~USD $167,000). This threshold is adjusted annually for inflation by the DGII [1].
Here’s the key: you only pay the 1% tax on the amount above the exemption threshold. For example, if your property is assessed at $200,000 USD, you would pay 1% on the difference ($200,000 – $167,000 = $33,000), which amounts to just $330 per year. Many properties on the North Coast fall below or near this threshold, meaning the annual tax burden is minimal or nonexistent.
3. Capital Gains Tax
When you sell your property, you will be subject to a capital gains tax on the profit you’ve made. The rate is 27% of the net capital gain, calculated as the difference between the sale price and the purchase price, adjusted for inflation and minus any documented improvements you’ve made to the property [3].
This is why keeping thorough records of any renovations, upgrades, or improvements is essential — they reduce your taxable gain when it’s time to sell.
Major Tax Exemptions for Foreign Buyers
The Dominican Republic offers two powerful tax exemptions that can significantly reduce your tax burden: the CONFOTUR Tourism Incentive Law and the property tax exemption for individuals over 65.
CONFOTUR (Law 158-01): The Ultimate Tax Incentive
CONFOTUR is a law designed to promote tourism development in specific regions of the country. If you buy a property in a government-approved, CONFOTUR-certified project, you are exempt from the most significant property-related taxes for up to 15 years [1]:
| Tax | CONFOTUR Exemption |
|---|---|
| 3% Transfer Tax | Completely exempt at purchase |
| 1% Annual IPI Tax | Exempt for up to 15 years |
| Rental Income Tax | Rental income is tax-exempt |
Not all developments qualify for CONFOTUR — the project must be certified by the Dominican government. Projects like Travieso and Waves Condos Encuentro on the North Coast are CONFOTUR-approved, making them highly attractive for investors seeking to maximize their returns.
The 65+ Exemption: A Powerful Benefit for Retirees
This is one of the most underappreciated tax benefits in the Dominican Republic. Under Law No. 18-88 (amended by Law No. 253-12), property owners who meet the following criteria are completely exempt from the 1% annual property tax (IPI) [2]:
- Must be 65 years of age or older
- Must own only a single property in the Dominican Republic
- Must not own any other registered real estate under their name in the country
Crucially, this exemption applies to foreigners regardless of their residency or immigration status. You do not need to be a Dominican resident to qualify. This interpretation has been confirmed by legal experts and aligns with the Dominican Republic’s strategy to attract foreign retirees and investors [2].
The DGII reviews compliance annually. The exemption is revoked if you purchase another property, rent out the property, or the beneficiary passes away.
New Build vs. Resale: Tax Implications
When deciding between a new build and a resale property, the tax implications can be a deciding factor.
New builds located in certified developments are more likely to be CONFOTUR-approved, offering the most significant tax advantages. This is the primary reason many investors prefer new construction in designated tourist zones — the combined savings on transfer tax, annual property tax, and rental income tax over 15 years can amount to tens of thousands of dollars.
Resale properties are generally not eligible for CONFOTUR benefits, even if located in a tourism zone. Buyers of resale properties will pay the standard 3% transfer tax and will be subject to the annual IPI tax if the property’s value exceeds the exemption threshold. However, the 65+ exemption still applies to resale properties if the owner qualifies — making resale an attractive option for retirees who meet the criteria.
What About Closing Costs?
Beyond the transfer tax, buyers should budget for additional closing costs that typically range from 1% to 3% of the purchase price. These include legal fees (usually 1-2%), notary fees, and property registration costs at the Registro de Títulos. It’s also worth noting that the 18% ITBIS (Dominican VAT) applies to professional service fees like legal and notary charges, but not to the residential property transfer itself [1].
Frequently Asked Questions
1. Do foreigners pay more property tax than Dominicans?
No. The tax laws in the Dominican Republic apply equally to both foreigners and Dominican citizens. There are no extra taxes or surcharges for international buyers [1].
2. How is the value of my property assessed for tax purposes?
The DGII (Dirección General de Impuestos Internos) determines the assessed value of properties for tax purposes. This value is typically reviewed every few years and is often lower than the market or purchase price.
3. Can I qualify for both CONFOTUR and the 65+ exemption?
If your property is in a CONFOTUR-approved project, the CONFOTUR exemption already covers the annual property tax for up to 15 years. The 65+ exemption is most valuable for properties that are not CONFOTUR-certified, such as resale homes or developments like Casa Linda.
4. Do I need a Dominican bank account to pay my property taxes?
While not strictly required, having a local bank account is highly recommended as it simplifies the process of paying taxes and other local expenses.
The Bottom Line
The Dominican Republic’s tax system is transparent and investor-friendly. By understanding the key taxes and taking advantage of powerful exemptions like CONFOTUR and the 65+ rule, you can make a financially sound investment that allows you to enjoy everything this beautiful country has to offer.
For personalized advice on how these tax laws apply to your specific situation and to explore properties with the best tax advantages, schedule a conversation with us today.