You’ve found a property you love in the Dominican Republic. Maybe it’s a condo steps from the beach, a villa with a private pool, or an investment property you plan to rent out.
Then comes the question almost every buyer eventually asks:
“Okay… what am I actually going to pay in taxes?”
It’s an important question — and one that’s much better to ask before you buy than after.
While every transaction is different, there are a few key taxes and costs that buyers should understand when purchasing real estate in the Dominican Republic.
Let’s Start With the Big One: The 3% Transfer Tax
In most standard property purchases, the buyer is responsible for a 3% property transfer tax. This is generally calculated using the higher of the property's value established by the Dominican tax authority (DGII) or the purchase price declared in the sales contract.
So, for a simple example, if the taxable value of a property is US$250,000, a 3% transfer tax would be approximately US$7,500.
That’s not an insignificant amount, which is why we encourage buyers to factor taxes and closing costs into their budget from the beginning rather than looking only at the advertised property price.
The transfer tax generally needs to be paid before the title can be transferred and registered in the new owner's name.
But Here’s Where CONFOTUR Gets Interesting
If you’ve been researching real estate in the Dominican Republic, you may have already heard the word CONFOTUR. And there’s a good reason buyers pay attention to it. Certain tourism developments approved under the Dominican Republic's CONFOTUR incentive program may offer significant tax benefits to qualifying buyers.
Depending on the property and transaction, those benefits can include:
0% property transfer tax
Instead of paying the standard 3% transfer tax, a qualifying first buyer may be exempt.
IPI property tax exemptions
A qualifying property may also be exempt from annual IPI property taxes for the applicable exemption period.
On the right property, those savings can add up.
But there’s an important catch: not every property in a tourism area qualifies for CONFOTUR benefits.
Before assuming an exemption applies, buyers should have the project's current CONFOTUR status and the benefits applicable to their particular purchase properly verified.
What About Annual Property Tax?
Another term you'll hear when buying in the DR is IPI, or the annual Real Estate Property Tax. For individuals, IPI is generally charged at 1% of taxable real estate holdings above the exemption threshold established each year by the DGII.
For 2026, that threshold is approximately RD$10.7 million.
One detail buyers sometimes overlook is that the calculation can consider the combined taxable value of an individual's real estate holdings rather than simply looking at each property separately.
There are also exemptions and special circumstances, so this is an area where getting advice based on your individual situation matters.
Planning to Finance Your Purchase?
If you’re buying with a mortgage, there may be another tax to consider.
Registering a mortgage can generally result in a 2% tax on the mortgaged amount, along with other financing and registration expenses.
That doesn't mean financing isn't worthwhile. It simply means your mortgage costs should be part of the conversation when determining your total acquisition budget.
And Then There Are the Other Closing Costs
The purchase price and taxes aren't the entire picture.
Depending on the transaction, you may also need to budget for legal and notary fees, title registration, due diligence, professional services, financing expenses, and other applicable closing costs.
This is exactly why two properties with the same asking price don't necessarily have the same true purchase cost.
A property with a tax exemption, for example, could ultimately be more financially attractive than another property with a slightly lower asking price.
Do Foreign Buyers Pay More?
This is another question we hear often.
Foreign buyers generally have the same property ownership rights and obligations as Dominican citizens when purchasing ordinary residential and tourism real estate.
In other words, there isn't an additional 3% transfer-tax surcharge simply because you're Canadian, American, European, or from somewhere else.
That accessibility is one of the reasons the Dominican Republic — and particularly areas such as Puerto Plata, Sosúa, and Cabarete — continues to attract international property buyers.
So, What Should You Budget For?
As a starting point, remember these numbers:
- 3% — Standard property transfer tax
- 1% — Annual IPI on taxable property holdings above the applicable exemption threshold for individuals
- 2% — Mortgage registration tax that may apply if you're financing
- Potentially 0% transfer tax — For qualifying purchases with applicable CONFOTUR benefits
But don't stop at the percentages.
Before buying, ask what taxes apply to that specific property, whether any exemptions are available, and what your estimated total closing costs will be.
Those questions can make a meaningful difference in your overall investment.
Buying Should Feel Exciting — Not Confusing
Buying property in another country can feel overwhelming, especially when you're trying to understand unfamiliar taxes, laws, titles, financing, and closing procedures at the same time.
You don't need to become an expert in Dominican tax law to buy property here.
You do need the right people around you and the right questions answered before you make your decision.
At Dream City Real Estate, our role goes beyond showing properties. We want our clients to understand what they're buying, what to expect throughout the process, and what questions they should be asking along the way.
If you're considering buying a home or investment property in the Dominican Republic, contact Dream City Real Estate. We can help you explore available properties and connect you with the appropriate legal and professional resources to understand the costs and potential tax advantages associated with your purchase.
This article is intended for general informational purposes only and does not constitute legal, accounting, or tax advice. Dominican tax laws, thresholds, incentive programs, and exemptions can change, and their application depends on the individual transaction. Buyers should consult a qualified Dominican attorney or tax professional before purchasing property.
