Dominican Republic property taxes are built around one main annual charge: the 1% IPI tax applied only to the portion of a property's value above an inflation-indexed exemption (RD$10,695,494, roughly US$170,000–182,000 in 2026). Buyers also pay a one-time 3% transfer tax at closing. Foreigners pay identical rates to Dominican nationals, and many properties under the threshold owe no annual tax at all.
For anyone comparing the Dominican Republic real estate market to Florida, Mexico, or the Bahamas, this is one of the most consistent selling points agents repeat and the numbers largely back it up. But "low taxes" doesn't mean "no taxes," and the details around assessed value, corporate ownership, and CONTOUR exemptions are where buyers either save thousands of dollars or get caught off guard. Here's how the system actually works.
The Three Property Taxes Every Buyer Needs to Know
| Tax | When You Pay It | Rate | Who Pays |
| Transfer Tax (Impuesto de Transferencia Inmobiliaria) | Once, at closing | 3% of the DGII-assessed value (or purchase price, whichever is higher) | Buyer |
| Annual Property Tax (IPI) | Every year, in two installments | 1% of assessed value above the exemption threshold | Owner (individuals and corporations) |
| Capital Gains Tax | Once, at resale | 27% of the taxable gain (corporate rate; individuals use ISR income tax scale) | Seller |
A fourth cost rental income tax applies if you let the property out, and is covered separately below.
Property Tax in the Dominican Republic: How IPI Actually Works
The annual property tax, known locally as Impuesto al Patrimonio Inmobiliario (IPI), is administered nationally by the DGII (Dirección General de Impuestos Internos) rather than by individual municipalities. That keeps the system relatively uniform across the country compared to the patchwork of municipal rates seen in the U.S. or Canada.
Here's the mechanic that trips up most first-time buyers: individuals are exempt from IPI on the value of their real estate up to RD$10,695,494, or roughly US$182,000, for 2026, with the exact dollar equivalent shifting slightly depending on which source's exchange-rate snapshot you use most current guides land between US$168,000 and US$182,000. Anything above that threshold is taxed at 1%, and the threshold itself is adjusted annually for inflation based on Central Bank data.
Working example: A condo assessed at US$300,000 has roughly US$120,000 sitting above the threshold. The annual IPI bill comes out to around US$1,180, a fraction of what a similarly valued property would owe in property tax in Florida or most U.S. coastal states. View property for sale in las terrenas
Smaller property example: A US$160,000 condo in Sosúa sits entirely below the threshold, so its owner pays zero annual IPI. This is exactly why a large share of the affordable condo inventory marketed to retirees and lifestyle buyers carries no recurring property tax at all.
Payment Schedule
IPI is paid in two semi-annual installments the first due March 11 and the second due September 11 each year and owners must file the real estate tax declaration within the first 60 days of the year. Missing these dates triggers fines and interest, so most expat owners set up payment through their attorney or property manager rather than relying on memory across two annual deadlines.
The Threshold Trap: Multiple Properties and Corporate Ownership
Two structural details catch nearly every foreign investor off guard:
- The exemption is cumulative, not per-property. If you own three condos worth US$100,000 each, you don't get three separate exemptions; your combined US$300,000 portfolio is treated as one taxable estate, with only roughly US$182,000 shielded.
- Corporate and trust ownership loses the exemption entirely. If you hold property through a Dominican SRL or a trust, the entire value is subject to 1% IPI from the first dollar; there's no exemption threshold at all. Trusts and companies are taxed at 1% on the total value of taxable assets, regardless of size.
Many buyers default to corporate ownership purely for liability protection, then discover their annual tax bill is dramatically higher than a neighbor who bought the identical unit in their personal name. If asset protection is your priority, this is a conversation to have with a Dominican tax attorney before closing, not after the first IPI bill arrives.
Closing Costs in the Dominican Republic: What to Budget Beyond the Purchase Price
Buyers typically budget 3% to 5% above the purchase price to cover all closing-related costs. The breakdown looks like this:
| Closing Cost Item | Typical Range |
| Transfer tax (3% of assessed value) | 3% |
| Legal and notary fees | 1.0%–1.5% of purchase price |
| 18% ITBIS (VAT) on legal fees | Applies on top of legal fee total |
| Title registration and administrative charges | Variable, modest |
One nuance that works in the buyer's favor more often than not: the 3% transfer tax is calculated on the higher of the DGII-assessed value or the declared purchase price but DGII assessed values frequently run below current market price, which can quietly reduce the effective rate paid.
CONFOTUR: The Exemption That Changes the Math Entirely
For buyers considering new construction in tourism zones, CONFOTUR (Law 158-01) is arguably the single most important tax incentive in the Dominican market, and it's underused in most buyer conversations.
Qualifying tourism-zone properties receive a 100% exemption from the 3% title transfer tax and a full waiver of the 1% annual IPI for up to 15 years from the project's certification date. The savings compound quickly:
- On a $300,000 property, annual IPI savings run roughly $1,300 per year for an individual owner, or about $19,500 over 15 years.
- On a $500,000 property, annual savings reach about $3,300 per year, or roughly $49,500 over the full 15-year term.
- Properties held through a corporate SRL structure see even larger savings, since corporate ownership has no exemption threshold to begin with.
- On a $200,000–$400,000 condo, the transfer tax exemption alone saves $6,000 to $12,000 at closing.
Important caveat: CONFOTUR certification applies to the development, not the buyer. If you purchase a resale unit after part of the 15-year window has elapsed, you inherit the remaining years, not a fresh term so always verify the certification start date before assuming a full benefit period.
CONFOTUR also extends beyond property tax: qualifying projects can offer rental income tax exemption for up to 10 years on tourism-related rental revenue, which matters most for buyers in condo-hotels or resort developments with active rental pools.
Rental Income Tax: What Landlords Actually Owe
If you plan to generate rental income from your Dominican property, a separate tax layer applies on top of IPI:
- Rental income is subject to income tax (ISR), and if your tenant is a company, it typically withholds 10% of the rent payment on your behalf.
- Landlords can deduct legitimate expenses, maintenance costs, property management fees, insurance, and other documented costs directly tied to the rental from taxable rental income.
- Short-term, tourist-style rentals (villas, apartahotels, vacation rentals) are also subject to the 18% ITBIS (VAT) on top of regular income tax, while long-term housing rentals are generally exempt from ITBIS.
This distinction matters enormously for ROI modeling: an Airbnb-style unit in Punta Cana or Las Terrenas carries a meaningfully different tax profile than the same unit rented to a long-term tenant.
Market Snapshot: Where the Tax Picture Meets Investment Strategy
Property taxes don't exist in isolation they shape net ROI differently depending on location and strategy:
- Punta Cana / Bávaro: High short-term rental demand helps offset the 18% ITBIS exposure on tourist rentals; many newer developments carry CONFOTUR status.
- Las Terrenas: Strong expat-driven price appreciation, with CONFOTUR increasingly common among 2026-era projects.
- Cabarete / Sosúa: Popular with retirees; many condos here sit below the IPI exemption threshold entirely, which keeps holding costs minimal.
- Santo Domingo: Larger urban long-term rental market, where ITBIS-exempt long-term leases simplify the tax picture compared to vacation-rental zones.
National average occupancy for short-term rentals hovers around 42–49%, and reaching the 60%-plus threshold that makes the numbers compelling typically depends on professional on-the-ground management and dynamic pricing, a reminder that tax efficiency alone doesn't guarantee returns; operational execution still drives the bottom line.
Common Mistakes Foreign Buyers Make
- Assuming purchase price equals taxable value DGII's assessed value is what actually matters for both transfer tax and IPI.
- Forgetting that the IPI exemption is cumulative across all properties owned, not per unit.
- Defaulting to corporate ownership for liability reasons without realizing it eliminates the IPI exemption threshold entirely.
- Assuming a resold "CONFOTUR property" carries a fresh 15-year term rather than the remaining balance.
- Skipping a tax-liability check during closing unpaid IPI from a previous owner can attach to the property file as a lien.
Frequently Asked Questions
Do foreigners pay higher property taxes in the Dominican Republic than locals? No. Foreign buyers pay the exact same IPI, transfer tax, and capital gains rates as Dominican citizens. There's no foreign-ownership surcharge anywhere in the system.
What is the IPI exemption threshold for 2026?
It's set at RD$10,695,494, which converts to roughly US$170,000–$182,000 depending on the exchange rate used. Property value below that amount owes no annual tax.
Does the property tax exemption apply per property or per owner?
Per owner, combined across all their Dominican real estate. If you own multiple properties, their assessed values are added together before the exemption is applied.
Is property tax different if I buy through a company instead of my own name?
Yes, significantly. Corporate and trust ownership structures pay 1% IPI on the entire assessed value with no exemption threshold, while individual owners only pay on the amount above the threshold.
What is CONFOTUR and how much can it save me?
CONFOTUR is a tourism-investment law that exempts qualifying properties from the 3% transfer tax and the annual 1% IPI for up to 15 years. On a $300,000–$500,000 property, that can mean $25,000–$50,000+ in combined savings over the exemption period.
How much should I budget for closing costs in the Dominican Republic?
Plan for 3% to 5% above the purchase price, covering the 3% transfer tax plus 1%–1.5% in legal and notary fees, plus applicable VAT on those fees.
Is rental income from my Dominican property taxed separately from property tax?
Yes. Rental income is subject to income tax (ISR) and, for short-term tourist rentals, an additional 18% ITBIS. Long-term residential leases are generally exempt from ITBIS.
Ready to Buy with Confidence?
Property tax in the Dominican Republic is genuinely lighter than in most North American or European markets but only when you structure the purchase correctly from day one. Whether you're weighing a CONFOTUR new build against a resale condo, or trying to figure out whether personal or corporate ownership fits your situation, the right local legal and real estate guidance pays for itself many times over.
Talk to a Dominican Republic real estate specialist today to review your target property's assessed value, confirm any CONFOTUR status, and build a closing-cost and tax projection before you make an offer.
