When purchasing a property, there are several taxes and fiscal obligations that you must assume. In this article, we will talk about the required tax you must pay when buying a property and registering it under your name, which called the transfer tax.
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 to transfer the title of property to the seller and place 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.