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Guide on Real Estate Taxes in the Dominican Republic

Real estate taxes are a fundamental aspect of purchasing and owning real estate in the Dominican Republic. Understanding how these taxes work is essential for anyone considering investing in property in this beautiful Caribbean country. In this article, Dream Homes DR will guide you through the main real estate taxes in the Dominican Republic and provide you with the information necessary to make informed financial decisions.

Real Estate Transfer Tax (ITBI): The ITBI is one of the most important taxes on property transactions in the Dominican Republic. It applies when transferring property from a seller to a buyer. The amount of this tax is generally shared between the buyer and the seller. The ITBI rate varies depending on the value of the property and can range between 2% and 5%. It is important to note that, in some cases, new housing projects may be exempt from ITBI.

Real Estate Property Tax (IPI): The IPI is an annual tax that owners must pay on the cadastral value of their properties. The IPI rate varies depending on the value of the property and can range from 1% to a maximum of 1.3%. This tax is collected by local administrations and is used to finance local public services, such as garbage collection and road maintenance.

Tax on Real Estate Under Development (IBI-D): The IBI-D is applied to properties under development and is calculated on the value of the land during the construction period. Rates may vary and are set based on location and land value. This tax is relevant for those involved in construction projects.

Real Estate Income Tax (IGI): The IGI is applied to profits obtained from the sale of properties in the Dominican Republic. If you sell a property and make a profit, you will be subject to this tax. The rate is 27% on net profits. It is important to keep proper records of property-related costs to correctly calculate profits.