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Property taxes in the Dominican Republic operate through a straightforward system with clearly defined rates and thresholds for 2025.
The Dominican Republic real estate market has four main tax categories: a 3% transfer tax on purchases, a 1% annual property tax above RD$10.19 million, progressive income tax rates up to 27% on rental income, and a flat 27% capital gains tax on sales profits.
If you want to go deeper, you can check our pack of documents related to the real estate market in the Dominican Republic, based on reliable facts and data, not opinions or rumors.
The Dominican Republic property tax system requires buyers to pay a 3% transfer tax (ITBI) plus approximately 2-3% in closing costs, while owners pay 1% annually on property values exceeding RD$10.19 million.
Rental income faces progressive tax rates up to 27%, short-term rentals add 18% ITBIS, and capital gains are taxed at a flat 27% rate on net profits from property sales.
| Tax Category | Tax Name | Rate/Amount | Who Pays | Calculation Base |
|---|---|---|---|---|
| Purchase | Transfer Tax (ITBI) | 3% | Buyer | Cadastral/Market Value |
| Purchase | Registration Fee | ~1% | Buyer | Transaction Value |
| Ownership | Annual Property Tax (IPI) | 1% | Owner | Value above RD$10.19M |
| Rental Income | Income Tax (ISR) | 15%-27% | Owner | Net Rental Income |
| Short-term Rental | ITBIS (VAT) | 18% | Guest/Platform | Gross Rental Amount |
| Sale | Capital Gains Tax | 27% | Seller | Net Gain After Costs |
What are all the property-related taxes in the Dominican Republic for 2025—grouped by buying, owning, renting, and selling?
The Dominican Republic property tax system divides into four main categories with specific rates and thresholds as of September 2025.
For buying properties, you pay a 3% transfer tax (ITBI) on the cadastral or market value, whichever is higher, plus registration fees of approximately 1% and closing costs totaling 2-3% of the purchase price. The buyer always bears these costs unless specifically negotiated otherwise.
Ownership taxes include the annual Impuesto al Patrimonio Inmobiliario (IPI) at 1% on property values exceeding RD$10,190,833 for individuals, with no exemption threshold for companies or trusts. Municipal taxes range from 0.1% to 0.3% annually in major cities, while condo fees vary from RD$200 to RD$10,000 monthly depending on amenities.
Rental income faces progressive income tax rates from 15% to 27% on net income after deductible expenses, while short-term vacation rentals must collect 18% ITBIS (VAT) on gross receipts above certain thresholds.
Selling properties triggers a flat 27% capital gains tax on net profits after indexation adjustments, plus notary and registry fees of 0.5% to 1% of the sale price.
What is the property transfer tax in 2025, how is it calculated, and who pays it?
The Impuesto de Transferencia Inmobiliaria (ITBI) applies at exactly 3% of the property's taxable value in 2025.
The calculation base uses the higher of two values: the cadastral value (government-assessed value) or the declared purchase price. Dominican tax authorities will always apply the 3% rate to whichever amount is greater to prevent underreporting of transaction values.
The buyer always pays this tax, with no exceptions unless the property qualifies for CONFOTUR incentives. CONFOTUR-designated tourism properties receive complete exemption from the 3% transfer tax for up to 15 years from the development's approval date.
No minimum threshold exists—the 3% applies to all property transfers regardless of value. Surcharges only occur if authorities detect underreporting or misdeclaration, which can trigger penalties and interest charges on the additional tax owed.
Payment must occur before the property title transfer can be registered, making it a mandatory closing cost that cannot be deferred or financed.
What one-off closing costs apply in 2025 and what are their exact rates?
| Closing Cost | Rate/Amount | Collected By | Notes |
|---|---|---|---|
| Transfer Tax (ITBI) | 3% | Tax Authority (DGII) | Buyer pays on cadastral/market value |
| Registration Fee | ~1% of value | Property Registry Office | For registering new title |
| Notary/Attorney Fee | 1%-1.5% | Notary/Attorney | Negotiated but customary rate |
| Appraisal/Survey | Up to $600 USD | Licensed Appraiser | Required for individual seller transfers |
| Stamps/Translation | $100-$200 each | Notary/Translator | For foreign clients needing English contracts |
| Real Estate Commission | 3%-6% of price | Real Estate Agent | Usually seller pays, occasionally buyer |
What is the annual property tax in 2025 and how does it work?
The Impuesto al Patrimonio Inmobiliario (IPI) charges 1% annually on property values exceeding RD$10,190,833 for individual owners as of September 2025.
The exemption threshold of RD$10,190,833 (approximately $172,230 USD) applies to the combined value of all properties owned by an individual person. Once your total property holdings exceed this amount, you pay 1% on the entire excess value, not just the portion above the threshold.
Companies, trusts, and LLCs pay 1% on the full cadastral value of all properties owned, with no exemption threshold available. This makes corporate ownership significantly more expensive for tax purposes compared to individual ownership.
Valuation uses the cadastral value established by the last registered transaction or official appraisal by the Cadastre Office. The government adjusts the exemption threshold annually for inflation, so the RD$10,190,833 figure reflects the 2025 adjustment.
Payment occurs in two semi-annual installments: 50% due March 11 and 50% due September 11. The tax declaration must be filed within 60 days of each tax year beginning.
How does property ownership through a company or trust affect annual taxes in 2025?
Corporate and trust ownership eliminates the RD$10,190,833 exemption available to individuals, requiring payment of 1% on the full cadastral value of all properties owned.
The annual tax applies to the legal entity as a whole, covering all property assets without any threshold protection. A company owning properties worth RD$20 million pays RD$200,000 annually (1% of the full amount), while an individual would pay only on the excess above RD$10,190,833.
Corporate entities can credit the IPI payment against their corporate income tax liability if they have sufficient income tax obligations. This partial offset helps reduce the effective cost but requires careful tax planning to maximize the benefit.
Trust structures follow the same 1% rate on full value, but the specific tax treatment depends on whether the trust is recognized as a separate entity or treated as a pass-through for tax purposes.
This tax difference makes individual ownership more attractive for smaller property portfolios, while corporate structures may still benefit larger investors through other legal and operational advantages despite the higher annual tax burden.
Are there municipal or condo fees tied to property ownership?
Municipal property taxes exist but remain minimal in most Dominican Republic locations, typically ranging from 0.1% to 0.3% annually in major cities like Santo Domingo and Santiago.
Condo and HOA fees represent the largest ongoing ownership cost after the annual IPI tax. Monthly fees range from RD$200 for basic buildings to RD$10,000 for luxury developments with extensive amenities like pools, gyms, security, and beach access.
Sanitation and garbage collection fees are usually included in HOA payments rather than charged separately. Some municipalities collect small annual fees for these services, but they rarely exceed RD$1,000-2,000 annually.
Resort and gated community properties often charge premium HOA fees of RD$5,000-15,000 monthly due to extensive shared facilities, 24-hour security, landscaping, and property management services.
These fees are set by the condo board or HOA and can increase annually, making it essential to review the fee history and budget projections before purchasing in any development.
How is long-term rental income taxed in 2025 for residents and non-residents?
Long-term rental income faces progressive income tax rates under the Impuesto Sobre la Renta (ISR) system, with identical treatment for Dominican residents and non-residents earning Dominican-source income.
The progressive rates for 2025 start at 15% for income up to RD$563,917 annually, increase to 20% for the next bracket, and reach 25%-27% for the highest income levels. These rates apply to net rental income after deducting allowable expenses.
Deductible expenses include property repairs and maintenance, HOA fees, property taxes, utilities paid by the owner, real estate agent commissions, property management fees, and depreciation calculated according to tax regulations.
Corporate tenants must withhold 10% of rental payments at source and remit this amount to the tax authorities as advance payment against the owner's annual income tax liability. Individual tenants typically do not withhold taxes.
Non-residents only pay Dominican income tax on their Dominican-source rental income, avoiding taxation on their worldwide income. However, they must still file annual tax returns and comply with all local tax obligations for their rental properties.
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How are short-term and vacation rentals taxed in 2025?
Short-term vacation rentals face multiple tax obligations including income tax on profits and ITBIS (VAT) collection on gross rental receipts.
ITBIS applies at 18% on gross rental amounts when the rental period exceeds 30 days or when the property operator meets certain revenue thresholds. Platforms like Airbnb often collect and remit this tax automatically, but property owners remain ultimately responsible.
Tourism taxes may apply as an additional 10%-15% charge in designated tourism zones, though these are often included within the ITBIS calculation rather than charged separately.
Income tax treatment follows the same progressive rates as long-term rentals (15%-27%) but applies to net income after deducting the ITBIS paid, operating expenses, and platform commissions. Systematic short-term rental operations are treated as business income.
Registration requirements include obtaining a tourism services license in many municipalities and registering with the tax authorities as a service provider. Failure to register can result in penalties and back-tax assessments on unreported income.
How are capital gains calculated and taxed when selling property in 2025?
Capital gains tax applies at a flat 27% rate for both individuals and companies on the net gain from property sales, calculated after indexation adjustments for inflation.
The taxable gain equals the sale price minus the indexed purchase price and allowable costs. Indexation uses official inflation rates to adjust the original purchase price, reducing the taxable gain and the resulting tax burden.
Allowable costs include the original purchase price, transfer taxes paid on acquisition, major improvements that increased property value, selling costs like real estate commissions, and legal fees for both purchase and sale transactions.
The 27% rate applies to the final net gain after all adjustments and deductions. No preferential rates exist for long-term holdings, making the tax rate consistent regardless of how long you owned the property.
A 1% withholding applies at closing as advance payment against the final capital gains tax liability. Sellers must file a tax return within 60 days of the sale to settle any additional tax owed or claim refunds if the withholding exceeded the actual tax due.
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What exemptions or incentives can reduce these taxes in 2025?
CONFOTUR tourism development projects receive the most significant tax benefits, including complete exemption from the 3% transfer tax and annual IPI payments for up to 15 years from project approval.
Senior citizens aged 65 and older qualify for full IPI exemption on their primary residence, regardless of property value. This exemption applies only to the principal home and cannot be used for investment properties or second homes.
Foreign retirees under Law 171-07 receive 50% reduction on IPI payments and may qualify for transfer tax exemptions on their first property purchase. Some also benefit from reduced capital gains tax rates when selling their primary residence.
First-time homebuyer programs occasionally offer reduced transfer tax rates or extended payment terms, though these programs are less common and typically apply only to lower-value properties or specific developments.
Low-value property exemptions automatically apply when total property holdings remain below the RD$10,190,833 IPI threshold, providing complete exemption from annual property taxes for most middle-class homeowners.
What are the filing requirements, deadlines, and penalties for each tax in 2025?
Transfer tax (ITBI) must be paid before property title registration, with payment typically occurring at closing through the notary or attorney handling the transaction.
Annual IPI payments split into two deadlines: 50% due March 11 and 50% due September 11, with the tax declaration filed within 60 days of the tax year beginning. Late payment incurs monthly interest charges of 1.5%-2% plus penalties.
Rental income tax follows the general income tax calendar, with monthly withholding payments due by the 10th of the following month and annual reconciliation returns filed by March 31 for the previous tax year.
Capital gains tax returns must be filed within 60 days of the property sale, with any additional tax beyond the 1% withholding due within 30 days of filing. Late filing triggers penalties of 10% of the tax owed plus monthly interest.
ITBIS for short-term rentals requires monthly filing by the 20th of the following month, with penalties ranging from RD$3,000 to RD$50,000 for late or missing returns depending on the size of the business.
Can you show three worked examples with exact calculations in DOP and USD?
Example 1: Buying RD$10M Condo for Personal Use
| Cost Item | Calculation | DOP Amount | USD Amount |
|---|---|---|---|
| Purchase Price | - | 10,000,000 | 169,000 |
| Transfer Tax (3%) | 10,000,000 × 3% | 300,000 | 5,070 |
| Registration Fee (1%) | 10,000,000 × 1% | 100,000 | 1,690 |
| Notary Fee (1.2%) | 10,000,000 × 1.2% | 120,000 | 2,028 |
| Appraisal | Fixed | 30,000 | 507 |
| Total Closing Costs | - | 550,000 | 9,295 |
| Annual IPI Tax | No tax (below threshold) | 0 | 0 |
Example 2: Buying RD$30M Villa for Short-term Rental
| Cost/Tax Item | Calculation | DOP Amount | USD Amount |
|---|---|---|---|
| Purchase Price | - | 30,000,000 | 507,000 |
| Transfer Tax (3%) | 30,000,000 × 3% | 900,000 | 15,210 |
| Registration Fee (1%) | 30,000,000 × 1% | 300,000 | 5,070 |
| Other Closing Costs | Notary, appraisal, etc. | 450,000 | 7,605 |
| Annual IPI Tax | (30,000,000-10,190,833) × 1% | 198,092 | 3,347 |
| ITBIS on Rental (Annual) | Estimated 18% on gross | Variable | Variable |
Example 3: Selling Property with RD$5M Gain
| Calculation Step | Formula | DOP Amount | USD Amount |
|---|---|---|---|
| Sale Price | - | 15,000,000 | 253,500 |
| Original Cost (Indexed) | - | 10,100,000 | 170,690 |
| Capital Gain | 15,000,000 - 10,100,000 | 4,900,000 | 82,810 |
| Capital Gains Tax (27%) | 4,900,000 × 27% | 1,323,000 | 22,359 |
| Withholding at Closing | 1% advance | 49,000 | 828 |
| Additional Tax Due | 1,323,000 - 49,000 | 1,274,000 | 21,531 |
It's something we develop in our Dominican Republic property pack.
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.
Understanding the Dominican Republic property tax system helps investors make informed decisions and budget accurately for all costs.
The combination of moderate annual taxes with significant CONFOTUR incentives makes the Dominican Republic competitive for both residential and investment property purchases.
Sources
- The Latinvestor - Dominican Property Taxes
- ICLG - Understanding CONFOTUR Law Benefits
- InDominicana - CONFOTUR Tax Benefits
- RealtorDR - Property Tax Guide
- Punta Cana Villa - IPI Tax Exemptions
- Nomad Tax - Dominican Republic Residency
- Taxes for Expats - Dominican Republic Guide
- PH Law - Tax Withholding Guide