Dominican
Republic Real Estate Questions and Answers
Certainly
if you have been considering a home, apartment, ocean front villa or even
rural farmland as well, it is very true that the Dominican Republic
does offer some of the most attractively priced real estate in the Caribbean.
Dollar
for dollar (or Peso for Peso) your money will go further in the DR
and thus the obvious interest of our clients. In addition, depending
upon the value of the home you purchase, it is quite possible that your
new home could be free of annual property taxes as well.
However,
just as is the case when investing in another country, local laws and
regulations could be different from what they are in your existing home
country. For that reason, it can be beneficial to have someone on
the ground, with the experience to make sure the entire process is as hassle
free as possible - - and of course conducted in such a way that the investment
you make is legally protected as well.
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Since many
clients of course have very similar questions, we have prepared a Question
and Answer section below that might assist you in the decision making process
regarding a real estate purchase:
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Can foreigners
own real estate in the Dominican Republic?
Yes, there
is no restriction. One need not become either a resident or citizen
in order to purchase real estate, although many of our clients do so if
spending more than 90 days at a time inside the country, or if deciding
to live full time of course.
However, a
client need only present a copy of a current and valid passport as the
identity document used for any sales contracts and eventual titles obtained
from the title office. Again, there are no restrictions for foreigners
to own property and unlike Mexico for example, no restriction for ocean
from real estate either. Recent legislation passed in the country
has also strengthened the legal rights of foreigners in the legal system
as it pertains to property ownership and investments inside the country.
In addition, you may use a real estate purchase as proof of local economic
solvency as it pertains the residency application process as well, should
you wish to consider becoming a resident or even a citizen later on (Ascot
Advisory can provide assistance with both the residency and naturalization
process also).
Is there
private title insurance available in the Dominican Republic?
Yes, there
are two companies that do offer local title insurance and Stewart Title
is one from the US that is well known to many Americans. While obtaining
title insurance may offer peace of mind for many buyers and while we can
assist with this process, regardless of whether or not you decide for pay
for private title insurance or not, in the least you should ALWAYS conduct
a title search by a trusted representative. Searching a title principally
involves checking BOTH title offices where the title will be registered
(the
local office in the province or district where the property is located
and the main title registry office also in the capital, Santo Domingo).
This is very
important because it could be possible that a lien or encumbrance is registered
in one office and not the other. Also, it is equally important to
check to see of the seller owes any back due property taxes (there are
annual real estate taxes in the Dominican Republic despite some incorrect
information floating around, but it is very inexpensive by North American
standards). The reason for this that the tax office does not repossess
property for back due taxes as a standard practice. Instead they
will keep a tabulation of the outstanding annual taxes that might be due,
plus the 50-percent late penalty, and refuse to transfer title to the new
buyer until all such taxes have been paid.
Obviously
it would be better to know about any issues like this before you hand over
any monies to the seller. Obviously these kind of matters are what
we assist with in terms of the due diligence process for clients.
What are
some key features of the purchasing process I may not be aware of as a
foreigner?
One aspect
of the property purchase process that may be different for someone coming
from another country is the fact that a notarized sales contract constitutes
an immediate legal right of sale and possession.
The meaning
of this is, the moment both the buyer and seller sign the sales contract,
exchange payment and have the contract notarized, the buyer has the immediate
legal right to take possession of the property.
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Immediately
following this, the process of registration of a new title into the buyers
name begins, but in terms of legalities the initial notarized sales contract
has legal weight under the law for ownership purposes. Again, the title
transfer in some respects can be considered somewhat of a formality that
can take anywhere from 45 to 90 days, depending upon the expediency of
the government title registration office.
Are there
any taxes or fees to be paid as part of the title process?
Yes, and typically
it is the buyer that would pay the costs for such fees or taxes, which
in total can amount to roughly 7.5 percent of the purchase price.
There are a number of government fees and taxes related to this process,
some are fixed fees where as others relate to or are a direct percentage
of the transaction amount. Obviously once the sales contract is signed
and notarized, the property is yours (as the buyer) so with this logic
in mind, the title transfer process normally something the buyer would
want to do for his or her benefit and it is the buyers attorney that would
take charge of this.
Are There
Any Annual Property Taxes in The Dominican Republic?
That all depends
upon the value of the home you purchase. If you purchase a residential
property and it is worth RD$5 Million Pesos or less (about US$150,000)
then you pay ZERO annual real estate taxes. If the home is worth
more than that amount, you pay 1% (one percent) of the value over and above
RD$5 Million Pesos (over and above US$150,000). If your purchase
raw land or undeveloped land, then in that case there is an annual property
tax calculation regardless of the value. Since it is very possible
to find a middle class home or luxury apartment for less than 5 Million
Pesos, many of our clients do not have any annual tax payments on their
Dominican Real Estate.
Where is
the best place to purchase real estate and what can I expect to pay?
The decision
as to where you might want to purchase a home, farm or apartment of course
comes down to you, in terms of lifestyle choices. The Dominican Republic
offers miles of typical idyllic Caribbean beaches, but also the highest
mountain range in the Caribbean as well (Pico Duarte). In fact, there
is a section of the country that is called the Alps of the Caribbean, complete
with cooler climate, pine trees and ferns similar to what can be found
in the US New England states. Apart from that, there are the metropolitan
areas of Santo Domingo (the capital city with a population of about 3.8
Million people) and the second largest city, Santiago (with a population
of about 1 Million). Many clients are in fact quite surprised in
terms of what is available in these metropolitan areas, and you will find
a large number of modern stores, supermarkets, shopping malls, movie theaters
(new
films in English, albeit with Spanish Language subtitles) and a whole lot
more. Some major chain stores and brands in these cities that many
Americans and Europeans might be familiar with include Carrefours, Benneton,
Radio Shack, Price-Smart (Price Cosco), Ethan Allan furniture, TGI
Fridays, Outback Steakhouse, Tony Romas, and much, much more. In
short, if you wish to live in or near a modern urban area with these type
of stores and services - it certainly is available.
Should you
have an interest in purchasing a residential building lot in one of these
urban areas, you can expect to pay about US$50 per square meter, or about
US$25,000 for a 500 square meter lot in a modern residential development
(complete with paved road, utilities, etc.) Since 1 acre is equal
to 4,000 square meters, such a sized home lot is equal to about 1/8 of
an acre. In addition, it is still possible to find a brand new residential
home or apartment priced anywhere from the equivalent of US$65,000 up to
US$175,000 - all depending upon location and size. As an example,
we found a recent two story Penthouse apartment (with a sea view) recently
sold for US$120,000. In addition, there are brand new three bedroom
- three bath luxury apartments going up in an upscale neighborhood of Santo
Domingo, starting at US$120,000 and going up in price from there (all
depending upon size, features, etc.)
In addition,
we have also found for our clients, brand new apartments going up in some
of the middle class areas starting at about US$65,000. So there really
is a wide range of choices, all depending upon what you want. However,
it should be noted that such properties would include apartments ranging
from 1,200 square feet up to 4,000 - complete with private parking, doorman
for the building, etc.
Should you
decide to venture outside the cities or urban areas, you can still find
property selling for US$5 per square meter, and the equivalent of about
US$1,500 per acre on up for land in some rural areas as well (depending
upon quality, if very fertile farmland, etc.) Like anything else,
it all depends upon location, size and so on. However, in terms of beachfront,
it is still possible to find one-quarter acre beach property for about
US$85,000 (or less for larger parcels). With regards to homes or apartments
on or near a beach community, current prices (2006) range from US$90,000
for a one or two bedroom condo directly on the beach ranging up to about
US$150,000 for an ocean view villa as well.
