How much tax do you pay for a villa in Cabarete?

Authored by the expert who managed and guided the team behind the Dominican Republic Property Pack

Yes, the analysis of Cabarete's property market is included in our pack

Who is the author of this content?

THE LATINVESTOR

A team specialized in real estate investing in LATAM countries

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Cabarete. If you'd like to learn more about us, you can check our presentation page.

Fact-checked and reviewed by our local expert

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Gigi Tea 🇩🇴

Realtor, at RealtorDR

With her Dominican-American heritage and local presence, Gigi has deep insight into the Cabarete real estate market. She will help you find the perfect property to match the town's adventurous and relaxed vibe. After speaking with her, we incorporated her perspective into this blog post, which also helped refine and validate the content.

What's the purchase price range for villas in Cabarete?

Modern villas in Cabarete typically range from $245,000 to $285,000 USD for new builds around 1,000 square feet near the beach areas.

These prices reflect properties within walking distance of Cabarete Bay, where most buyers focus their search. Villas further inland or requiring renovation can be found for $180,000-$220,000, while luxury beachfront properties with larger footprints often exceed $350,000.

The $285,000 price point represents a well-positioned villa that serves as our calculation example throughout this guide. This price level gives you access to modern construction, decent proximity to the beach, and standard amenities expected by international buyers.

As of September 2025, these prices have remained relatively stable compared to 2024, with modest increases of 3-5% year-over-year in the most desirable locations.

What's the official property tax rate in Cabarete and how is it calculated?

The Dominican Republic applies a uniform 1% annual property tax rate to all properties valued above the national exemption threshold.

This tax, known as Impuesto sobre la Propiedad Inmobiliaria (IPI), is calculated based on the government's official assessed value, not the furniture or personal property inside. The assessment typically aligns with the purchase price for recently bought properties, though older properties may have outdated assessments.

The calculation is straightforward: take the property's assessed value, subtract the exemption threshold of RD$10,190,833 (approximately $166,000 USD as of September 2025), then apply the 1% rate to the remaining amount. No progressive rates or additional complications exist in the Dominican system.

Property tax assessments are conducted by the Dirección General de Impuestos Internos (DGII) and are binding for tax calculation purposes, regardless of market fluctuations or private appraisals.

What's the exact annual property tax amount for a villa worth $285,000?

For a villa assessed at $285,000 USD, the annual property tax would be $1,190.

Here's the calculation: $285,000 (assessed value) minus $166,000 (exemption threshold) equals $119,000 taxable value. Applying the 1% rate: $119,000 × 1% = $1,190 annually.

This amount is due in full by March 11th each year, though the Dominican Republic allows you to split it into two payments: 50% by March 11th and 50% by September 11th. Most villa owners choose the split payment option to improve cash flow management.

It's something we develop in our Dominican Republic property pack.

Are there any thresholds or exemptions that reduce property tax?

The primary exemption threshold for 2025 is RD$10,190,833 (approximately $166,000 USD), meaning properties below this value pay zero annual property tax.

What's the yearly municipal tax rate for villas?

There is no separate annual municipal property tax in Cabarete or anywhere else in the Dominican Republic.

The 1% IPI property tax is a national tax collected by the central government, not municipalities. Local governments in the Dominican Republic do not have the authority to levy additional annual property taxes on residential villas.

However, municipalities can charge fees for specific services like garbage collection, street lighting, or infrastructure maintenance. These are typically handled through homeowner association fees rather than direct municipal billing for individual villa owners.

This system differs from many other countries where property owners face both national and local property taxes, making the Dominican Republic's approach relatively straightforward for international buyers.

Are there additional government fees or levies for property ownership?

Beyond the annual property tax, villa owners face several one-time government fees at purchase but no ongoing annual levies.

The primary ongoing obligation is the annual 1% property tax discussed above. Government fees are concentrated at the time of purchase and include legal documentation, notary services, and registration costs.

Legal fees typically run about 1% of the purchase price, notary fees range from 0.25% to 1%, and documentary stamps add approximately 1.3%. These are one-time costs, not recurring annual obligations.

No wealth taxes, capital gains taxes on primary residences, or special foreign ownership fees apply to villa ownership in Cabarete. The Dominican government keeps ongoing costs minimal to encourage foreign investment in real estate.

What's the one-time transfer tax rate and cost?

The transfer tax rate is 3% of the property's value, calculated on whichever is higher: the official assessed value or the contract purchase price.

For a $285,000 villa, the transfer tax would be $8,550 ($285,000 × 3%). This is a one-time cost paid at closing and represents one of the largest expenses in the purchasing process after the down payment.

This transfer tax is paid to the Dirección General de Impuestos Internos (DGII) and cannot be avoided or reduced through any legal exemptions for residential villa purchases. The tax applies to both Dominican citizens and foreign buyers equally.

The transfer tax must be paid before the property deed can be officially transferred and recorded in the Dominican Republic's property registry, making it a mandatory closing cost that should be budgeted upfront.

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Are there annual homeowner association fees for villas?

Most villa communities in Cabarete charge HOA fees ranging from $2 to $3 per square meter monthly, translating to $2,400-$3,600 annually for a typical 100-square-meter villa.

These fees cover essential services like security, landscaping of common areas, pool maintenance, road upkeep within the community, and sometimes utilities for shared spaces. Gated communities with extensive amenities charge toward the higher end of this range.

Some luxury villa developments charge significantly more, particularly those with golf course access, beach clubs, or concierge services. These premium communities can charge $4-6 per square meter monthly, pushing annual costs to $4,800-$7,200 for larger villas.

It's something we develop in our Dominican Republic property pack.

HOA fees are typically billed quarterly and are considered mandatory for villa owners within managed communities, with legal consequences for non-payment including liens on the property.

Are there maintenance or infrastructure fees from the municipality?

Individual villa owners typically do not receive separate municipal maintenance or infrastructure bills, as these services are usually covered through HOA fees in managed communities.

For villas outside managed communities, some basic municipal services like street lighting and garbage collection may be billed directly, but these costs are generally modest—usually $20-50 monthly when they exist.

The Puerto Plata municipal government, which oversees Cabarete, focuses most infrastructure maintenance on public roads and central areas rather than individual residential streets. Private villa communities handle their own internal infrastructure through HOA fees.

Water and electricity are billed separately by national utilities (CORAAPLATA for water, EDESUR for electricity) and are not considered municipal taxes or fees. These utility costs typically run $80-150 monthly for a standard villa depending on usage and season.

We did some research and made this infographic to help you quickly compare rental yields of the major cities in the Dominican Republic versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.

What's the total estimated yearly cost of taxes and mandatory fees?

For a $285,000 villa in Cabarete, expect total annual mandatory costs between $3,590 and $4,790, excluding utilities and insurance.

These figures represent ongoing annual costs after the initial purchase. First-year costs are significantly higher due to the one-time transfer tax of $8,550 and legal/notary fees around $5,175.

How do property taxes change if the villa's value increases?

Property taxes increase proportionally with assessed value increases, maintaining the same 1% rate above the exemption threshold.

If your villa's official assessed value rises from $285,000 to $320,000, your taxable amount increases from $119,000 to $154,000 ($320,000 - $166,000). Your annual tax would rise from $1,190 to $1,540—an increase of $350 annually.

The Dominican Republic's property assessment system doesn't automatically adjust values each year like some countries. Reassessments typically occur when properties are sold, significantly renovated, or during periodic municipal reviews that happen every 5-10 years.

It's something we develop in our Dominican Republic property pack.

Property owners can contest assessments they believe are unfairly high through the DGII appeals process, though this requires presenting evidence of comparable property values or professional appraisals to support their case.

Are there penalties for late property tax payment?

Late property tax payments trigger a 10% penalty for the first month, plus an additional 4% penalty for each subsequent month, along with 1.1% monthly compensatory interest.

For a $1,190 annual tax bill paid one month late, you'd face: $119 (10% penalty) + $13.09 (1.1% interest) = $132.09 additional cost. If paid two months late, add another $47.60 (4% second month) + $13.09 (second month interest) = $192.78 total penalties.

These penalties compound quickly and can significantly increase your total tax burden. The Dominican Republic enforces these penalties strictly, and accumulated debt can result in property liens that complicate future sales or refinancing.

The government can ultimately pursue forced sale of properties with substantial unpaid tax debt, though this typically requires several years of non-payment. Setting up automatic payments or calendar reminders for the March 11th and September 11th deadlines helps avoid these costly penalties entirely.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

Sources

1. Blue Sail Realty - Cabarete Property Listings
2. Cabarete Properties - Real Estate Investment Guide
3. RealtorDR - Dominican Republic Property Tax Guide
4. DR Property Guys - Buying Process and Laws
5. TheLatinvestor - Cabarete Price Forecasts
6. Dominican Republic Real Estate - Tax Exemptions
7. Blue Sail Realty - Tax Benefits and Exemptions
8. Jordi Albertus Law - Transfer Taxes
9. TheLatinvestor - Dominican Property Taxes
10. Cabarete Properties - DR Buying Process