Why Dominican Republic Real Estate?
Skyline of Santo Domingo
As the number 1 tourism destination in the Caribbean region, the Dominican Republic has been enjoying significant economic success over the past decade. The Dominican Republic real estate market has risen hand in hand with this, both in terms of its appeal to international buyers and in terms of its fiscal value to the nation. (Please scroll down to see our Dominican Republic real estate for sale.)
There are no restrictions on foreign nationals owningDominican Republic real estate; furthermore the government positively encourages overseas buyers to purchase property in the Dominican Republic.
- The Dominican Republic has the largest economy in the Central American and Caribbean region, and it’s exceptionally foreigner friendly.
- Annually over the last 10 years it has enjoyed growth in the amount of investment it receives from overseas into sectors such as real estate, tourism and manufacturing.
- As the Dominican Republic understands the importance of the tourism and real estate sectors and the requirement for the maintenance of sustained foreign investment via both sectors, investors should be encouraged by the commercial environment and the political support they enjoy.
- The Dominican Republic’s government has been accused of having one of the worst records for retaining and utilizing wealth however, and there is a vast gulf between the affluent and the impoverished.
- The nation’s continued concerns relating to poverty, crime and infrastructure problems suppress the real estate market’s potential somewhat.
- However, an investor keen to cash in on rising tourism demand and seeking a medium to long-term commitment, could do very well from targeting the Dominican Republic’s property sector as prices remain low for the Caribbean region, and certainly have room for positive growth as long as the country continues to address its ingrained problems.
- Forming two thirds of the island of Hispaniola, which it shares with Haiti, the Puerto Plata region of the Dominican Republic where much of the tourism and real estate interest is centered, has not been hit by a hurricane in over 100 years.
Dominican Republic Real Estate Market
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- Increasing numbers of overseas buyers are encouraging greater transparency in the real estate purchase and registration process.
- Corruption can be an issue facing overseas buyers to a lesser or greater extent depending on how cautiously they approach the Dominican Republic’s real estate market.
- Those buyers who tread carefully and understand the buying process, stick to the main areas for international interest and hire legal support can have a seamless buying experience.
- The majority of international buyers of real estate in the Dominican Republic are either second home seekers or investors. North American interest is particularly strong because of the nation’s accessibility from the United States, and the fact the nation has 8 international airports.
- The wealth disparity in the Dominican Republic affects not only the nation’s people but the country’s development. Long-term local and international commitment to bridge the gap is hugely encouraging for investors, as it will open up many opportunities for the Dominican Republic in the future.
- Future prospects to encourage investor commitment include the development of new areas of the nation as tourism hubs, resulting in not only an expansion in tourism interest, but a demand for everything from accommodation to the services and amenities that travelers expect.
- The tax incentives offered by the Dominican Republic to foreign investors and international retirees highlight the nation’s long-term commitment to supporting the attraction and retention of overseas interest.
- Investors seeking a solid and proven market, where potential exists for strong long-term growth, where FDI is incentivized, and where opportunities exist and will grow in the residential and commercial real estate sectors should consider the Dominican Republic carefully.
Property Investments, Taxes and Doing Business in Dominican Republic
- Round-trip Dominican Republic real estate transaction costs are modest for the region at between 9.5% and 15.5%; the burden is weighted on the vendor with a purchaser only paying between 4.5 and 5.5%.
- The realtor’s fee is usually negotiable at between 5 and 10% of the purchase price; this is paid by the vendor.
- International buyers are not restricted from owning real estate in the Dominican Republic and enjoy exactly the same rights as local citizens.
- Due diligence should be undertaken carefully, specifically but not exclusively because any outstanding debts such as unpaid taxes fall to a new buyer if not identified prior to the completion of the sale process.
- Documents required to begin the due diligence phase include the certificate of title, a survey of the property, a copy of the vendor’s ID and copies of property tax receipts, unless a property is exempt in which case a copy of the certificate of exemption. Finally, a copy of approved construction plans should be obtained.
- Title insurance is available for Dominican Republic real estate.
- Any deposit paid and any financial transactions should occur via escrow. No money should be paid in cash or transacted via an estate agent.
- The entire purchase process can take upwards of 50 days.
- Some experts recommend structuring property investments within a Dominican Republic corporation in order to legally avoid the 27% capital gains taxes upon resale of the real estate.
- Nonresident’s Dominican Republic sourced income is taxed at the corporate tax rate of 27% (tax year 2015). Various expenses are deductible when computing taxable income, and rental income is subject to a 10% withholding tax. This is considered an advance payment and is credited against the final income tax liability.
- Rental law in the Dominican Republic broadly favors the tenant as rent controls are in place restricting levels and increases. Additionally it is hard to evict a tenant. However, many investors simply target either the tourism market or the commercial market.
Dominican Republic Property Investment Visa
- Investors and expatriates seeking real estate for sale in the Dominican Republic do not require a visa to buy property.
- The residents of most nations (with the notable exceptions of Argentina, Chile, Ecuador, Israel, Japan, Perú, South Korea and Uruguay) require a tourist card or visa to enter the Dominican Republic.
- Anyone wishing to obtain residency must begin the process from within the nation, having entered on a tourism visa.
- Documentary requirements for visa application vary depending on the applicant’s nationality and the visa type they are applying for.
- Visas available include residence, student, business visa, business visa for employment and dependent.
- Retirees usually apply under the residence category and enjoy incentives for choosing the Dominican Republic for their retirement abroad as ratified under the Special Incentives law 171-07.
- According to the Ministerio de Turismo de República Dominicana, incentives for qualifying individuals include tax-free receipt of foreign sourced pension income and the opportunity to import personal belongings and a car tax free.
- Other special incentives for qualifying individuals include 50% exemption on property tax, exemption of tax on the payment of dividends and interest generated in-country or overseas, 50% tax exemption on mortgages when the mortgage company is a financial institution regulated by the Dominican financial monetary law.
- Additionally there is a tax exemption on the purchase of household and personal items and property transfers, and a partial exemption on vehicle taxes.
- Finally there is a 50% tax exemption on capital earnings, as long as the person receiving the income is the majority shareholder of the company and that the company is not involved in commercial or industrial activities.
- It is critical to ensure you qualify for these special incentives before banking on them: age is not a requirement, a minimum income of $2,000 a month is, and another requirement is being able to obtain permanent residence within 45 days.
- To obtain a residency visa applicants will need to supply multiple documents, translated, notarized and apostilled where required, including their identification documentation, medical certificate, police/criminal record certificate, birth & marriage certificates, and proof of financial solvency.
- After 7 years of legal residence in the Dominican Republic, foreign residents may apply for citizenship and a second passport.
[Source: Dominican Republic Visas]
Dominican Republic Real Estate Markets of Interest
Santo Domingo: this is the capital and largest city of the Dominican Republic, and in population terms it is the largest city in the Caribbean. Santo Domingo is the oldest continuously inhabited European settlement in the Americas, and was the first seat of the Spanish colonial rule in the New World. Santo Domingo became the site of the first university, cathedral, castle, monastery, and fortress in the New World. Its historic Zona Colonial (Colonial zone) is a UNESCO World Heritage Site today.
Located on the southern coast, Santo Domingo is the cultural, financial, political, commercial and industrial center of the nation and it’s home to the main seaport handling cruise liners and freight traffic alike. Santo Domingo has a very cosmopolitan feel, and the majority of visitors to the Dominican Republic make at least a day excursion to the capital. There are very strong commercial Dominican Republic real estate options available, supported by the city’s vibrant business environment: particularly of interest are prime retail and office space.
In terms of residential real estate available it covers everything from high-rise apartments in the business district to old colonial properties ripe for renovation, and from single and multi family house to condos for vacation rental purposes.
The Beaches of the Dominican Republic
Sosua / Cabarete: both Sosua and Cabarete are stunning beach towns in the Puerto Plato province in northern Dominican Republic, popular with tourists, expats and Dominican Republic real estate investors. Sousa has become a major area for real estate development in recent years as its appeal has increased, and demand has risen for homes for sale.
It’s a very popular spot with international tourists, being extremely accessible via the Puerto Plato International Airport, which is only 4 miles away. Sosua is culturally diverse, and home to expats from across the world.
Available for sale are everything from sprawling and luxurious villas in the hills nearby, to fantastic condominiums with stunning beach views and direct access to the sand. Cabarete is about a 10 minute drive from Sousa and is a very popular destination for water sports enthusiasts.
Like Sousa, Cabarete has become a magnet for expats from many nations, and is culturally diverse and very laid-back. Real estate offerings are very similar to Sosua and prices are on a par in both centers.
Puerto Plata: the city of San Felipe de Puerto Plata is often referred to as simply Puerto Plata, and it is the capital of the Puerto Plata region of the Dominican Republic. The city and the region are arguably the tourism heart of the nation. The city itself is home to famous resorts such as Playa Dorada and Costa Dorada, and the region is of course home to the popular towns previously discussed namely: Sousa and Cabarete. Located ideally within reach of 2 of the nation’s international airports, the city of Puerto Plata is very easily accessible, and this adds to its appeal among visitors and investor alike. The city is vibrant, thriving, bustling and beautiful. It has every amenity and service an expat or holidaymaker could want – from multiple tourism attractions to shopping and healthcare facilities, not to mention schools, beautiful beaches and the consulates of many nations.
Real estate options are exceptionally broad. Commercial options exist, particularly in terms of retail space. Development opportunities in the wider Puerto Plato region exist for those seeking to target tourism or second home demand.
Gated apartment communities are popular with overseas buyers looking at relocating to the Dominican Republic, and there are even beachfront villas and condos available for sale.
Prices for real estate in Puerto Plato are among the highest in the entire nation, supported by strong demand and growth on the back of an expanding and robust tourism industry.
Las Terrenas: for those seeking some of the best real estate in a stunning location, Las Terrenas is an excellent alternative to Puerto Plata or any of its resorts. The beachfront town on the northeastern coast is easily accessible from the capital of the Dominican Republic in less than 2 hours thanks to the recent completion of a new highway, and so its tourism appeal is not just international but domestic.
Investment into the tourism offering in and around Las Terrenas has been very strong; the real estate market has piggy backed off this and there are plenty of new developments for investors to consider.
Living in the Dominican Republic
Expatriates choosing the Dominican Republic for their new home abroad are welcome by the friendly people, and by a government that offers incentives to anyone of independent means to relocate and contribute to the nation by offering them significant tax breaks.
The pace of life is fairly laid-back away from the main tourism resorts and the center of the capital of Santo Domingo, and expats who choose to really step off the beaten track can enjoy a very low cost of living.
Required investment in everything from infrastructure to reducing the divide between those who have and those who have not is slow to materialize. This can affect expats in the form of electricity outages, concerns about crime in some areas, and in terms of how they are viewed as naturally wealthy simply because they come from overseas.
These are not uncommon problems in many parts of the world, but by being aware of the issues expats can personally secure against them. Some choose to live in gated communities, among other expats or in the tourism facing resorts where infrastructure, amenities and safety are better.
The cost of living in the Dominican Republic is relatively cheap, however the strong tourism market artificially pushes up the prices of some goods and services particularly in the tourism facing resorts. Expats can guard against being charged the higher foreigner price by integrating and learning to speak Spanish well.
The benefits of living in the Dominican Republic are almost too numerous to mention: from the pace of life to the climate, from the stunning geography to the availability of sophisticated services in healthcare. And expats who have made the transition usually say they would never live anywhere else.
Dominican Republic Location and Geography
The Dominican Republic occupies the eastern two-thirds of the island of Hispaniola: it shares the island with the Republic of Haiti.
The country is the second largest in the Caribbean and is located right at the heart of the Caribbean region.
The Dominican Republic borders the Atlantic Ocean to the north, and the Caribbean Sea to the south.
The official language is Spanish, the currency is the Dominican Peso, and the climate is wonderfully tropical all year round.
The Dominican Republic is historically and culturally one of the richest destinations in the Caribbean, and it is stunningly beautiful because it enjoys such a diverse topography encompassing 12 National Parks, and including the ubiquitous Caribbean white sandy beaches, lush tropical rain forests, desert-like expanses, historically interesting cities, towns and buildings, impressive mountain ranges and high producing farmland.
The Dominican Republic enjoys political stability, a strong economy and the healthiest tourism market in the Caribbean Region.
[Source: For more information Dominican Republic Wikipedia]
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