Dominican Republic Transfer Tax: the 3% Explained

The dominican republic transfer tax is 3% of the property value, and you have six months to pay it. On a condo appraised at US$200,000, that is US$6,000. Below I explain exactly which value the 3% is calculated on, who pays it, what penalties apply if you miss the deadline, and when you are exempt.

If you have already signed the sales contract, you must submit it with the Local Administration of the General Directorate of Internal Taxes (or Dominican IRS), then request the appraisal of the property purchased. 

The Local Administration of the General Director of Internal Taxes, verifies if the seller is up to date in fulfilling his fiscal obligations and requests the appraisal inspection of the property and determine the amount of taxes to pay.

And is it necessary to pay the transfer tax?

Yes, it is mandatory. Failure to pay taxes penalized by the Dominican law. The payment of this tax is necessary and obligatory in order to remove the title of property from the seller’s name and issue it in the name of the buyer.

Once you have purchased the property and signed the contract to sale, you must register such property into the buyer’s name, to do this you must pay the transfer tax within six (6) months counted from the moment the contract has been signed and notarized. 

So now the must asked question… how much you have to pay? And how many times? The transfer tax amount is a one-time charge. It is three percent (3%) of the higher value between the appraisal and the price of the property stated in the contract to sale. 

So, if the higher price is 200,000 dollars, you’ll have to pay 3% of that value, which is $ 6,000. dollars. 

The only exemption on this transfer tax payment is if you are buying in a touristical area registered under CONFOTUR law benefits, which I have spoken in a video and that I leave you the link below, out how to invest and not pay either transfer taxes or property taxes for 15 years.

Now if you do not pay this transfer taxes within six months, this tax will be affected by interests and penalty charges will be added with interests established in the Dominican Tax Law’s.

These penalties are as follows: Graph with example.

• 10% late penalty fee for the first month and an additional 4% for the following months. 

• 1.10% of compensatory interest for each month or fraction of a month. Now you are more prepared to invest in the Dominican Republic, but if you still have doubts, subscribe to my channel or follow me on social networks where you will continuously receive all the information you need to invest safely and quickly.

How much is the transfer tax in the Dominican Republic?

It is 3% of the property value. This is a one-time tax established by Law 173-07, paid once when you register the property in your name.

Which value is the Dominican Republic transfer tax calculated on?

On the higher of two figures: the price stated in your purchase contract, or the DGII appraisal. This catches many foreign buyers off guard. Even if you negotiated a good price, if the DGII appraises the property higher, the tax is based on the appraisal.

Who pays the transfer tax, buyer or seller?

By market custom in the Dominican Republic the buyer pays it, because the buyer needs the title issued in their name. It is not a legal split, it is common practice, and it can be negotiated in the contract. Get it in writing before you sign.

How long do I have to pay it?

Six months from the signing and notarisation of the purchase contract. After that, late penalties apply: 10% for the first month or part of it, an additional 4% per subsequent month, plus 1.10% monthly compensatory interest.

Is the transfer tax the same as the IPI property tax?

No, and confusing the two is common. The transfer tax is paid once, at purchase. The IPI is an annual tax that only applies when your combined property holdings exceed the current exemption threshold. I cover it in detail in my article on the IPI.

Are any properties exempt from the transfer tax?

Yes. Properties covered by Law 158-01, known as the CONFOTUR Law, are exempt. This is one reason many foreign buyers prioritise developments with this designation. You can read how the CONFOTUR Law works.

How do I pay it at the DGII, step by step?

You file the purchase contract with the DGII Local Administration office covering the property’s location. They verify that the seller is current on their tax obligations and assign an inspector to appraise the property. That appraisal determines the amount due. Once settled, you can process the new Certificate of Title at the Registry of Titles. You can consult the regulations directly at the Dirección General de Impuestos Internos and the Ministry of Finance.