Frequently Asked Questions (FAQ’s)
1. Which are the different types of taxes involved in a real estate property transfer?
There are two types of taxes related to a real estate property transfer. First, the transfer tax, a onetime payment when the property is transferred and the Title Deed passes to a new owner.
The second type of tax involved in a real estate acquisition is the tax on the property itself, which must be paid in two payments, in March and September of every year, for properties appraised over RD$5,000,000. Before transferring the property, the seller must ensure these payments have been paid. The buyer, on the other hand, must then assume the responsibility of making these bi-annual payments once the Title Deed has been transferred to their name.
2. How much do I have to pay for transfer taxes?Transfer taxes are 3% of the value of the real estate property, based on the value that results higher between the appraisal made by the Dominican tax authority (DGII) on the "Certificación de Activos" or IVSS and the value set forth in the contract (market value).
3. How much do I have to pay for real estate property taxes?
Property taxes, mentioned in Question 1, are calculated based on 1% of the total value of the property. These taxes must be covered indistinctly if the owner is a physical person or a legal entity. The liquidation for the payment is divided in two quotas that are due in March and September.
If a physical person will be selling a property appraised for more than RD$5,000,000, the original receipts of the property tax payments or "Impuestos sobre Propiedad Inmobiliaria" (IPI) must be presented. If the property is appraised for less than RD$5,000,000, the seller and buyer will be exempt of paying property taxes. As opposed to a physical person, legal entities or companies will always have to present the original receipts for the property tax payments (IPI), indistinctly of the property’s value.
4. What is the difference between IVSS and "Certificación de Activos"?A real estate property declaration or "Impuesto sobre las Viviendas Suntuarias y los Solares" (IVSS) is the annual declaration made by the owner or physical person at the Dominican tax authorities (DGII) regarding the real estate property under his possession. In this sense, the DGII will issue a declaration with the appraisal of the real estate property and the imputable tax, if applicable. Such declaration is necessary in order to compare this value with the value stated in the Purchase- Sale Agreement, in order to determine the highest amount and calculate the 3% transfer tax.
Legal entities or companies also need to complete the same process as a physical person, however, the real estate property declaration for legal entities is known as "Certificación de Activos", which states the property value assigned by the DGII.
5. Am I exempt from the payment of real estate property taxes?As per the guidelines and parameters of the Dominican tax authorities (DGII), the real estate properties exempt from the payment of real estate property taxes are the following:
- Physical persons owners of properties whose value is under RD$5,000,000;
- Property owners who are 65 years old or older, taking into account that the property has not been transferred in the last 15 years, and the owner only has such property under his possession; and,
- Buildings and lots owned by the Dominican State, charity institutions, religious organizations and diplomatic delegations.
6. What happens if I don’t have the original minutes of the General Board Meeting of the company?If you don’t have the original minutes of the General Board Meeting, a certified copy may be filed. Such copy must be sealed and signed by the President and Secretary of the company.
7. If I purchase a real estate property, in how much time will I receive the new Title Deed?
Title Registry takes approximately 45 days to issue the new Title Deed in order to complete the process of cancelling the previous Title Deed, and replacing it by a new one under the buyer’s name.
8. How do I know if the real estate property is mortgaged or has a legal restriction? If the applicant is the buyer, the attorneys at eLexPersona.com are responsible of investigating the status of the real estate property in the Title Registry Office. This due diligence protects the beneficiary in case the property is mortgaged or if there is an existent registration indicating the property has been previously sold.
9. How can I confirm if the person selling the real estate property is the real owner?Before we proceed in drafting the option agreement, we verify the legal status of the real estate property in the Title Registry Office, through which we can confirm who the real owner is.