A Buyer's Guide to Property Taxes in the Dominican Republic

When purchasing a property in the Dominican Republic, buyers are subject to a 3% transfer tax and a 1% annual property tax (IPI). Bonita Cap Cana is a CONFOTUR-approved project, and the CONFOTUR law provides exemptions from both of those property taxes for qualifying first buyers. Rental earnings are assessed under their own part of the Dominican tax code, and how the two meet on your purchase is a question for your attorney.

What taxes are due when I purchase my Bonita residence?

The primary tax due at the time of purchase is the Real Estate Transfer Tax (ITCD), which is a one-time payment of 3% of the property's market value as determined by the government appraisal. This tax is typically paid by the buyer before the title deed can be registered in their name.

However, Bonita Cap Cana is approved under the Dominican Republic's Law 158-01, also known as CONFOTUR. This law is designed to encourage tourism development. For the first buyer of a qualifying property like one of the 565 residences at Bonita, this law provides a full exemption from the 3% transfer tax. Your attorney will manage the application for this exemption as part of the closing process.

What annual property taxes will I owe as an owner?

The main annual property tax is the Impuesto a la Propiedad Inmobiliaria (IPI). This is a 1% annual tax levied on the value of real estate owned by individuals. Crucially, this 1% tax is not charged on the entire value of the property. It is only applied to the value that exceeds an annually-adjusted exemption threshold set by the Dominican tax authority (DGII). Most properties, therefore, pay IPI on only a portion of their total value.

For buyers at Bonita Cap Cana, the CONFOTUR law matters here as well. The law establishes a fifteen-year IPI exemption for qualifying tourism projects. That fifteen-year period is the term the law sets for a qualifying project, not a term granted to an individual buyer. How the exemption applies to a particular residence and owner, and for how long, should be confirmed with a Dominican attorney, who will also ensure it is correctly filed and recorded on the title deed.

How is income from renting my condo taxed?

If you choose to rent out your Bonita residence, the income you generate is subject to Dominican taxes. These are assessed under their own part of the tax code, separate from the property taxes CONFOTUR addresses. What is documented is that CONFOTUR's exemptions attach to the 3% transfer tax and the 1% annual IPI, and that rental earnings are assessed on their own; no source we hold rules on how the two meet for a particular unit, so treat that as a question for your attorney rather than as settled.

There are two main taxes on rental income:

• ITBIS (VAT): A value-added tax of 18% applies to short-term tourist accommodations. This is levied on the rental service provided. Under current law, the property owner is responsible for remitting this tax, not the booking platform.
• Withholding Tax: For non-resident owners, a 27% withholding tax is applied to the gross rental income. This is considered a final and definitive payment, meaning no deductions for expenses are permitted against it.

Because these taxes significantly impact net rental returns, it is essential to discuss them with a tax advisor to understand your specific obligations.

How do CONFOTUR benefits compare to the standard tax regime?

The tax exemptions provided under CONFOTUR Law 158-01 are a substantial advantage for qualifying first buyers at a new development like Bonita Cap Cana. The table below sets the standard tax obligations beside the CONFOTUR treatment. Read the property rows and the rental rows as two separate regimes: the exemptions are recorded against the transfer tax and the IPI, while rental earnings are assessed under their own rules.

How do I ensure my tax exemptions are applied?

The tax benefits under CONFOTUR are not applied automatically; they must be formally requested and registered. This is a standard part of the legal process when purchasing a new property in a qualifying development. Your legal counsel in the Dominican Republic will handle these steps on your behalf.

1. Developer Provides Certification
   As Bonita Cap Cana is an approved project, the developer provides the necessary certification from the tourism ministry (CONFOTUR).
2. Attorney Files for Exemption
   During the closing process, your attorney submits the CONFOTUR certification along with the purchase documents to the Dominican tax authority (DGII).
3. Title Deed is Registered
   The exemption is recorded, and the final title deed is issued in your name reflecting the tax-exempt status for both the transfer tax and the IPI.
4. Confirmation and Verification
   Your attorney provides you with the final, registered title, confirming that the exemptions are in place. This document is your official proof of the tax benefits.

Common questions

How does CONFOTUR relate to the tax on my rental income?

What is documented is narrower than a yes or a no. CONFOTUR's exemptions attach to the 3% property transfer tax and the 1% annual IPI, which are real savings on acquiring and holding the asset. Rental earnings are assessed separately, and that assessment includes the 27% non-resident withholding and the 18% ITBIS. No source we can cite rules on how the two meet for a particular unit, so ask your attorney rather than assuming an answer.

Is the 1% annual property tax (IPI) based on my purchase price?

The IPI is based on the value of the property as assessed by the tax authorities, which may differ from your purchase price. More importantly, the 1% is only charged on the value that exceeds a government-set threshold that is adjusted annually for inflation.

If I sell my Bonita condo, does the new buyer get the tax exemption?

The CONFOTUR tax exemptions are granted to the first buyer of a new property from the developer. The benefits are not transferable upon resale. A subsequent buyer would be subject to the standard tax regime, including the 3% transfer tax.

Who is responsible for paying the 18% ITBIS tax on rentals?

The property owner (the host) is legally responsible for collecting and remitting the 18% ITBIS on short-term rental services. This responsibility does not fall on the online booking platforms.