Requirements to buy Real Estate in the Dominican Republic
There are no restrictions for foreigners to purchase real estate in the Dominican Republic. Before purchasing property it is recommended to have an attorney investigate its legal status, for which the seller should provide the buyer with copies of Title Certificate, property survey or plan, his or her identity card or passport, documents showing that the property is either exempted or up to date with the tax payment, corporate documentation and authorization to sell (if applicable), condominium regulations and declaration (if applicable). In order to transfer ownership of real estate the following steps are required:
Signature of the "Sales Contract" before a Notary who will authenticate it. If the seller is married, the spouse must also sign the Contract of Sale. Contract of Sale will contain the legal description of the property, price and other conditions.
Appraisal of the property at the nearest Internal Revenue Office and then proceed with the payment of transfer taxes.
The Contract of Sale and the Certificate of Title of the seller are deposited, along with the documentation provided by Internal Revenue and copies of the Identity Cards or Passports of the parties involved, at the Title Registry Office for the jurisdiction where the property is located where the sale is recorded.
The Title Registry Office issues a new Certificate of Title in the name of the buyer and cancels the old Certificate issued previously to the seller. The time from the filing of the Contract of Sale to the issuance of the new Certificate of Title may vary from a few days to a few months depending on the Title Registry Office where the sale was recorded.
Legal fees are 1% of the actual sale price (minimum $ 800), which includes all necessary contracts for closure, research the legal status of the property and the steps to transfer the Certificate of Title in the name the new owner. The buyer pays for legal fees. The seller pays the real estate commission.
The tax on property transfer is three percent (3%) of the sales value, which is calculated from the value resulting highest between the Internal Revenue Office's appraisal and the value expressed in the contract (market value).
New Property Law for Real Estate.
This new law came into effect January 1st, 2013, and the main changes are:
1.- Properties owned by an individual and assessed by the government below 6.5 Million Pesos will be exempt of yearly property taxes and any excess will pay 1% per year.
2.- The value for all the properties that a person have will be added together and 6.5 Million Pesos will be exempt of yearly property taxes and the excess will pay 1% per year.
3.- There were no changes to corporate owned properties. All properties owned by a company will pay 1% per year of the assessed value with no exemptions.
Inheritance of Real Estate by Foreigners
There are no restrictions on foreigners inheriting title to real property in the Dominican Republic. Inheritance taxes are a 3% of the appraised value of the estate. If the beneficiary resides outside the Dominican Republic, inheritance taxes are subject to a 4.5% of the appraised value of the estate.
Process to obtain Dominican Residency
The process to obtain Dominican residency has been changed. It is now required that the applicant obtain a Residence Visa at the nearest Dominican consulate, in his country of origin. To obtain, the applicant must present their:
1.- Birth Certificate.
2.- Police Report.
3.- Marriage Certificate.
4.- Bank references from the applicant's country of origin, or if the client already owns property in DR, a copy of the title.
All these documents must have the APOSTILLE STAMP (Google: "Getting a document apostilled in [name of the town and country] ")
Apart from these documents, it is advisable that the applicant contact the Dominican consulate before going in order to make an appointment and determine if any other documents are necessary. The above listed documents are the basics but requirements may change slightly between consulates.
After receiving the documents, the consulate will proceed to stamp a Residence Visa in the applicant's passport, which will be valid for one year. The time to process the visa may be anywhere from 3 days to one month, depending on the consulate.
Once the applicant has the Residence Visa stamped in the passport, the consulate will return all documents. The applicant may then take them to an attorney and continue on in the process. The applicant must go to Santo Domingo for a medical exam and again in 4-5 months to pick up the residency card, which will be valid for one year.
After the first year, the applicant will have to renew the residency every year, for the first 5 years. The cost for an attorney handling the first residency will be approximately US$1,200. Renewals are less work and therefore the legal costs are less.
Incorporation of a Company under Dominican Law
If you would like to establish a Dominican corporation for any business or to buy Dominican real estate, there are 3 types:
The Limited Liability Company ("SRL" in Spanish).
- Minimum capital: RD$100,000.00.
- Minimum number of partners: 2; and maximum number: 50.
- The partners may be corporate entities.
- The Internal Auditor is optional.
- Only one Manager is required, and he must be a natural person.
- The company shares are not negotiable papers, and they cannot be bought or sold freely.
- The liability of the partners is limited to their contribution.
The Individually-owned Limited Liability Company ("EIRL" in Spanish).
- There is no maximum or minimum for the capital of the company, which must be fully disbursed.
- There are no stockholders, only one natural person who is the owner.
- The company is managed by the owner or by a manager.
- The Internal Auditor does not apply to this company.
The Joint Stock Company (S.A.) which may have been formed with private or public subscriptions.
- Minimum Authorized Capital: RD$30,000,000.00; subscribed Capital: RD$3,000,000.00. The capital of Joint Stock Companies with Public Subscriptions will be established by the "Superintendencia de Valores" of the Dominican Republic.
- Minimum: 2 partners; no maximum number of partners.
- The Board of Directors must consist of at least 3 directors.
- The President must be a natural person.
- An independent Internal Auditor, who has to be a CPA, must be appointed.
The cost to establish a Dominican corporation, including legal fees, is approximately US$1,200.00.