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If you are a person of some means, of course, you never wait in line. The propane man comes to your home regularly and fills your tanks, no problem. This disparity between rich and poor is typical throughout Latin America. It is something each new governmental administration promises to address, but they never seem to get far. So why do I, and so many foreigners who live in the DR, believe in the future of this country? Despite its recent economic ups and downs (more about that in a minute), there are signs that the country’s middle class is growing. I met many local people, well educated and articulate, who are working as secretaries, salespeople, tour guides, drivers, and employees for companies large and small. Most work in tourism-related fields as that industry is the country’s biggest source of revenue. These people love their country, believe in its future, and are champions of the less fortunate. They see progress and opportunity around every corner. New president, new start - In 2000, the Dominican economy captured the attention of the international community and was acclaimed as having the fastest-growing economy in all of Latin America and the Caribbean. From 1996 to 2000, the president of the DR was Leonel Fernandez. During his time in office, the economy grew by over 7% a year, led by tourism and duty-free assembly plants, making clothes, and other goods for the United States. In 2001, in spite of what was going on in the rest of the world, the economy grew by 2.7%—a rate that was five times higher than most other Latin American countries. In 2002 and 2003, under the new leadership of left-of-center president, Hipólito Mejía, things turned sour. A banking crisis put the economy into a tailspin. The DR peso lost half its value against the U.S. dollar last year. Two years ago, it traded at 16 pesos to $1. (Today, it is trading at 32.5 pesos to $1.) Inflation has been pushed to 35%. Electricity blackouts, frequent enough in the DR, occur even more often now. President Mejía responded by imposing a 5% tax on exports and tourism, a 2% import surcharge, and a tax on financial transactions. But receipts have been lower than expected since businessmen are reluctant to pay more taxes as long as the government fails to cut its spending. The DR’s history has been just as colorful. Between 1916 and 1924, it was under U.S. control. From 1930 until his assassination in 1961, Rafael Trujillo ruled with an iron fist. A coup and counter coup in 1965 led U.S. President Lyndon Johnson to send in the Marines. A massively corrupt government during the 1970s ruined the country economically. During the 80s and 90s, protests, riots, and more corruption ensued. Today’s Dominican Republic - In
May 2004, Leonel Fernandez was re-elected as president. One of the major
reasons for his victory was that while he was president from 1996 to 2000,
the country prospered. Fernandez promises to tidy up government finances.
The economy already looks like it will recover—although it is still struggling
with political and economic issues. Protests still erupt with volatility
at times—most often in Santo Domingo, the capital. But in tourist areas,
including the tranquil Caribbean-kissed shores of La Romana and Punta Cana,
and along the northern shore from Puerto Plata to Sosúa and Cabarete,
all is peaceful. No one wants to jeopardize tourism, the country’s top
source of revenue. Most accommodations are all-inclusive resorts and are
among the least expensive in Latin America and the Caribbean, making this
island truly a bargain destination. The northern coast of the DR has long
been the most popular spot on the island for tourists, as well as for foreigners
looking to buy property.
The "Acapulco of DR" - A few miles east of Puerto Plata is Playa Dorada, name to both a beautiful stretch of beach and a gated complex containing (at last count) 17 resorts, an 18-hole golf course, several dance clubs and casinos, and a sizable shopping center with a multi-screen cinema. Many visitors here never leave this complex. A bit farther east (15 miles from Puerto Plata) is Sosúa. After Puerto Plata, it is the commerce center of the north shore, followed by Cabarete, further east. In Sosúa, you can still find a few of the lovely handcrafted houses built by Jewish settlers in the 1940s. Nearby Playa Sosúa is a gorgeous stretch of tranquil beach. Because the north shore of the DR is bordered by the Atlantic Ocean, many of the beaches here are a bit rough. But not sheltered Playa Sosúa. Occasionally referred to as the "Acapulco of DR," this area is known for its nightlife, but in my opinion, seems to attract a more sedate crowd than Cabarete, which is a popular windsurfing spot and attracts a younger, hipper crowd. Cabarete is funky, fun, and lively. Located on a lovely white-sand beach along an enormous bay, the former fishing village now caters to tourists. Surfers, windsurfers, divers, and party-makers crowd the beaches by day and the bars at night. A "perfect moment" can be had at one of the many beachside restaurants here, enjoying a meal on a warm, tropical night. Good food, good wine, twinkling lights, a cooling sea breeze rustling through the palm trees, lapping waves, your shoes kicked off, and toes dug firmly into the sand…it doesn’t get much better. Between Sosúa and Cabarete
you will find many lovely expanses of beaches, including Perla Marina,
Seahorse Ranch, Encuentro, Punta Goleta, Kite Beach, Playa Laguna, and
others. This area is home to many of the area’s residential districts,
both along the beach and high in the hills with an ocean or mountain view.
Many foreigners have invested here.
Juan informed us that along the north shore, prices of well-built residences are highest in Sosúa (approximately $15 per square foot), up to two-thirds less in Cabarete ($4 to $5 per square foot), and much less the further away you get ($2 to $2.50 per square foot). Realtor Dean Brown showed us properties along the north shore. Dean is a transplanted North Carolinian who moved to the DR about four years ago and has never looked back. He says that the generosity and hospitality of the people is one reason he stays, along with the relaxed island lifestyle. Families with young children will be happy to hear that the English-based International Schools of Sosúa is accredited in the U.S., and Dean tells us tuition is approximately $5,000 per year. Some property samplers - You can buy a magnificent ocean-view house in Sosua measuring 3,766 square feet, with three bedrooms and four bathrooms for $340,000. The property sits on 1.7 acres of land with a swimming pool. Or, how about this—a seven bedroom/six bathroom home with 5,380 square feet, on 1.11 acres of land with a swimming pool, waterfall, and Jacuzzi for $330,000—it was originally listed for $550,000. That’s on the high end of the property scale. $179,000 will buy you a two-bed/two-bath house in a good location, with a swimming pool. Or an apartment in a secure complex with swimming pool for $43,500. All these properties are available through Century 21 It’s easy to buy - In 1998,
a law was written allowing foreigners to buy property in the Dominican
Republic with the same rights and obligations as a Dominican citizen. The
only requirement is that the Title Registry Offices keep a record, for
statistical purposes, of all purchases made by foreigners. Acquiring property
here is straightforward, but, still, foreigners purchasing property anywhere
in the world outside their native countries need to exercise extra caution.
The realtor and the notario (real estate attorney) you work with should
be able to help you through the process. It never hurts to hire your own
attorney, but it is common for realtors to recommend attorneys they feel
comfortable with. The attorneys I have listed were recommended to me by
Turalu Murdock of First American Title Insurance Company. The attorneys,
in turn, recommended who they believe are the island’s best real estate
brokers. I trust their judgment but it never hurts to seek your own resources
and advice.
Real estate purchases in the DR work a little differently than in the U.S. Instead of tendering a written offer, you first negotiate and reach a verbal agreement on the price with the seller. Then, a binding "Promise of Sale" or "Option to Purchase" is prepared by an attorney and signed by both parties. At this time, the deposit or advance payment is normally made. I am told that many attorneys and
notaries in the DR do not protect the buyer adequately in the "Promise
of Sale." For instance, sometimes buyers are asked to pay a large percentage
of the sale price without any security or direct interest over the property.
(Escrow agents are rarely used.) If these funds are misused, the buyer’s
only recourse is to sue the seller personally—and he may have become insolvent
by then. This can be particularly disconcerting if a bank forecloses on
a development property. Even if the developer has not performed his basic
obligations, you could still be responsible for making your payments as
contracted.
Four simple steps to ownership
Taxes and closing costs - Expect to pay approximately 5% of the sale price for taxes and closing costs. This amount includes a transfer tax of 4.48%, document taxes, special stamps for registration, and tips. Taxes must be paid before filing the purchase at the Title Registry Office. Many buyers, with the complicity of their attorneys or notaries, have been known to evade paying part of the transfer tax by lowering the true purchase price in the Contract of Sale. This is common practice in the DR and it has become so blatant and widespread that the tax authorities have now set a minimum value for properties in some locations. But, considering that property taxes here are extraordinarily low (1% per year of the declared value), unless you are buying a high-priced property, your annual taxes will be negligible. So, committing fraud to lower your annual rate may not be worth doing…especially if, when you go to resell, and 25% capital gains taxes are due, your property is assessed at its true worth. For these reasons, you should probably do the right thing from the beginning and claim the true price of purchase in your purchase documents. Ask your attorney for advice…if you use a loophole in the law that allows you to buy property through a DR corporation you have formed, you can lessen your tax burden considerably. Inheritance of real estate - There are no restrictions on foreigners inheriting title to property in the Dominican Republic. Inheritance taxes range from 17% to 32% of the appraised value of the estate depending on the relationship between the beneficiary and the deceased. If your beneficiary resides outside the DR, inheritance taxes are subject to a 50% surcharge. As in many Latin countries, inheritance of real property is governed by a law which provides for "forced heirship," meaning that part of the estate must go to certain heirs. 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. To avoid this application, you can own your property indirectly through a holding company. Again, ask your attorney to advise you of your options. Perform due diligence - Before
purchasing a property, hire a real estate attorney to do the due diligence.
To start this process, the seller should provide you and/or your attorney
with:
If the seller is a corporation, it
should provide:
If the property is part of a condominium,
you need:
If the property is a house, you need:
Once all the above documentation
is obtained, your attorney should go through this checklist:
Should you want to become a Dominican national, it is easy to do so. If you were born in the DR or have a Dominican parent, you are eligible for citizenship. If you do not meet these requirements, you can apply for naturalization. This request is made to the President of the country through the Ministry of Police and Inner Affairs. Documents including birth certificate and police records from your country of origin are required, as well as an explanation of why you wish to become a naturalized citizen. You can submit documents that support your request, including copies of your Property Certificate if you have made a real estate investment, as required for a residency visa. A DR attorney will normally charge $15,000 to $20,000 to help you through this process. The naturalization procedure lasts from one to two years and then, voila, you are a passport-carrying Dominicano. . .
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