Every investor knows the price of the property they buy in the Dominican Republic. Less well known is what it will cost to own it and, when the time comes, sell it.
The Dominican Republic offers a competitive tax framework for real estate investment, which Law No. 30-26, enacted in June 2026, has made more favourable. The following paragraphs outline its essential features.
1. Buying: the transfer tax
The acquisition is subject to a real estate transfer tax of 3%, payable by the buyer as a one-off payment at the time of registration. It is assessed on the higher of the contract price and the property valuation carried out by the General Directorate of Internal Taxes (DGII).
When the acquisition is financed, registration of the mortgage is currently subject to a 2% tax. The reform proposes reducing this rate to 1% in 2027, and the tax is expected to be abolished from 2028.
2. Ownership: the property tax
The Real Estate Property Tax (IPI) is an annual tax of 1% applicable to individuals. It applies to their total real estate holdings, only on the portion exceeding an exempt amount —RD$10,695,494 in 2026, approximately US$175,000—, and is calculated on the property value determined by the DGII, rather than its purchase price. The law also provides for specific exemptions, including for certain properties in tourism projects.
3. Selling: the reform’s major change
This is the stage at which the reform introduces its most significant change. Capital gains made by an individual on the sale of a property are now taxed at a single, final rate of 10%, compared with taxation that could previously reach 25%.
The law also introduces a particularly useful benefit: if you sell the property that is your primary residence and reinvest the proceeds in a new primary residence within the following six months, you will not pay capital gains tax. If the reinvestment is partial, the exemption applies in the same proportion. The law’s implementing regulations, currently being prepared, will specify the conditions for its application.
4. Individual or company: a decisive choice
Acquiring a property through a company is often driven by asset planning, succession or organisational considerations. However, it entails a different tax regime. The company does not pay IPI, but is subject to the annual 1% tax on assets, which operates as a minimum tax in relation to income tax. Incorporation will also become less expensive: the reform abolishes the 1% company incorporation tax from 2027.
On a sale, the reform introduces a considerable advantage. As a general rule, the gain made by a company on the sale of a property forms part of its income and is taxed at 27%. Law 30-26 now allows companies whose activity consists exclusively of holding real estate, without using it to carry out commercial activities, to benefit from the single, final rate of 10% applicable to individuals. Capital gains tax is thus reduced by almost two thirds, provided that the company strictly meets this exclusivity requirement.
Certain benefits reserved for individuals, such as the exemption for reinvestment in a primary residence or the benefits under Law 171-07, do not extend to the company. This is therefore a choice that should be made before the acquisition, since any subsequent restructuring also carries a tax cost.
5. Special regimes: the benefits offered by law
Certain profiles benefit from particularly favourable treatment. Pensioners and persons receiving passive income who qualify under Law 171-07 are exempt from transfer tax when acquiring their first property and benefit from reductions in IPI and capital gains tax. Properties in tourism projects classified under Tourism Promotion Law 158-01 (CONFOTUR) have their own exemptions.
Since the reform, a single taxpayer cannot combine more than one incentive regime for the same investment. Choosing the appropriate regime is therefore part of the planning process.
Planning ahead
The method of acquisition, the chosen structure, the applicable regime and the investment horizon largely determine its tax cost. These are matters best resolved before signing, while all options remain open.
Soto Legal supports investors at every stage of their real estate investment in the Dominican Republic, with the rigour and clarity that decisions of this kind demand.
CONTACT US
For an analysis of your investment project, you can contact our team:
Telephone / WhatsApp: +1 829 669 6640
Web: www.sotolegal.com.do
Office: Centro Comercial Kennedy, Local 111, Santo Domingo
This article is for information purposes, in accordance with the regulations in force in October 2026. It does not constitute legal or tax advice. Dollar equivalents are approximate.
