If your dream is to invest in paradise you’re going to want to learn more about the cost of homes in the Dominican Republic. Thanks to the rapidly growing tourism industry, the Dominican Republic real estate market is rapidly growing.
Since there are no restrictions for foreigners purchasing properties in the country, many foreigners and US citizens commonly purchase second homes in the country. Traditionally, the Dominican Republic has a reputation as being a tax haven for US citizens. Moreover, with the financial incentives offered by the Dominican Republic government to incentivize foreigners to purchase more property, US citizens can save money and find good deals on investment properties.
How much does it cost to purchase property in the Dominican Republic?
The Dominican Republic real estate market is particularly diverse. Prices on the lower end of the land market cost approximately $25 per square meter where as the lower end of the luxury market will be $100 per sq. meter . and go up to $500 per sq. meter. Luxurious in this example would be oceanfront land properties.
The most expensive property put on the real estate market in the Dominican Republic was listed at approximately 25 million.
To purchase land in the Dominican Republic, the cost will be roughly $30,000-$100,000. To build new construction on the land averages around $800- $1200 USD per square meter depending on the location and the construction materials used.
What is the down payment requirement for purchasing a property in the Dominican Republic?
It is standard for buyers in the DR to deposit 10% of the sales price. This deposit will reserve the property and take it off the market.
What are the incentives for foreign investors?
As previously mentioned, there are no restrictions on foreigners purchasing property in the Dominican Republic. Additionally, foreigners will enjoy the following incentives if they decide to invest in the country.
- Foreign investors are eligible for a 50% exemption in their property tax fees.
- If a foreign investor has a mortgage with a lending institution that is regulated by the Dominican Republic financial law, the investor will receive a 50% exemption on the taxes for their mortgages.
- Foreign investors are exempt from property taxes when the property transfers ownership.
- Developers are exempt for 10 years of all national and municipal taxes, including the transfer tax of ownership for the first purchaser of the property, Under the DR Law 158-01 on Tourism Incentive.
- Exemption from taxes charged on household and personal items.
Transaction Costs to Purchasing a Home in the Dominican Republic.
Buyers can expect to pay the following transaction costs when purchasing a home in the Dominican Republic. Transfer Tax (3%), Notary Fee (.25% – 1%), Document Stamp Tax (1.3%), Real Estate Agent’s Fee (5%-10%). Keep in mind that the real estate agent’s fee is negotiable. Overall, approximately 5% of the transaction costs will be paid by the buyer.
Overall, purchasing a second home, building new construction homes, and purchasing an investment property in the Dominican Republic are all affordable options. With the number of tax incentives available for investors, coupled with a booming rental market, and terrific tropical weather, foreigners have every reason to make the DR their second home.