When buying a house in the Dominican Republic, it’s important to plan for several upfront fees during the purchasing process, as well as ongoing costs that apply annually. Here is a breakdown of the key fees and costs you should be aware of:
1. Initial Costs (One-time Fees) When Buying a Property
a. Lawyer/Attorney Fees
- Cost: Typically 1% to 1.5% of the property purchase price.
- Purpose: You’ll need a local lawyer to review the purchase agreement, perform due diligence (e.g., title search, land registry check), draft contracts, and facilitate the closing process.
b. Real Estate Agent Fees
- Cost: Usually between 5% and 10% of the property’s purchase price, paid by the seller (not the buyer). However, this may be included indirectly in the sale price.
c. Notary Fees
- Cost: Approximately 0.5% to 1% of the property’s value.
- Purpose: A notary public in the Dominican Republic will oversee the transaction, authenticate documents, and ensure the property transfer is legally valid.
d. Property Transfer Tax (Impuesto de Transferencia Inmobiliaria)
- Cost: 3% of the property’s appraised value (determined by the tax authorities, which may be lower than the market price).
- Purpose: This tax is paid to the General Directorate of Internal Revenue (DGII) when the property title is transferred to the buyer.
e. Title Registration Fees
- Cost: Around 1% of the purchase price.
- Purpose: Covers the cost of registering the property in your name at the Title Registry Office (Registro de TÃtulos).
f. Appraisal and Inspection Fees
- Cost: Appraisal fees may range from USD $300 to $500.
- Purpose: Optional but recommended, especially if you’re financing the property, as banks may require an appraisal to assess the value.
g. Bank Fees (if applicable)
- Cost: If you’re using a mortgage, the bank may charge between 1% and 2% of the loan amount as an origination fee.
- Purpose: Covers the administrative cost of processing your mortgage.
h. Home Insurance
- Cost: Varies widely, but typically between USD $1,000 to $2,000 per year, depending on the property’s value and coverage options.
- Purpose: Optional but recommended to cover damages from natural disasters (hurricanes, floods, earthquakes) or theft.
i. Miscellaneous Administrative Fees
- Cost: Several smaller administrative costs may arise (e.g., official document translations, bank transfers, courier services). These could range from USD $100 to $300.
2. Annual/Recurring Costs After Purchase
a. Property Tax (Impuesto sobre la Propiedad Inmobiliaria – IPI)
- Cost: The IPI is 1% annually of the property’s value that exceeds DOP 9,860,649.00 (about USD $165,000 in 2024). Properties below this threshold are exempt.
- Purpose: Paid annually to the DGII, based on the tax authority’s appraised value of the property. If the property is held through a company, this exemption does not apply, and the tax is due regardless of the value.
b. Homeowners’ Association (HOA) Fees (if applicable)
- Cost: Varies based on the development and services offered, typically between USD $50 and $300 per month for condominiums or gated communities.
- Purpose: Covers maintenance of shared areas, security, landscaping, and other amenities.
c. Home Insurance (if opted for)
- Cost: Annually, this cost may range from USD $1,000 to $2,000, depending on the coverage you choose and the value of your home.
- Purpose: Protects against natural disasters, theft, or damage.
d. Utility Bills
- Electricity: Costs vary, but on average, monthly bills range between USD $50 and $200 depending on the property’s size, use of air conditioning, etc.
- Water: Water is usually inexpensive in the DR, typically between USD $10 and $30 per month.
- Internet and Cable TV: Costs can range from USD $30 to $100 per month, depending on your package.
e. Maintenance Costs
- Cost: Varies depending on the property type (house, apartment, etc.). Monthly maintenance can range from USD $100 to $500 for things like cleaning, landscaping, and pool maintenance.
- Purpose: Ensures the upkeep of your property, especially if it includes gardens or pools.
f. Rental Income Tax (if renting out the property)
- Cost: The rental income is subject to income tax at a progressive rate from 15% to 25%, depending on the total annual rental income.
- Purpose: If you rent out your property, you’ll need to report rental income and pay applicable taxes to the DGII.
g. Capital Gains Tax (on Sale)
- Cost: If you eventually sell the property, a capital gains tax is applied. The tax rate is 27% on the gain (difference between the selling price and purchase price).
- Purpose: This tax is payable upon the sale of the property and must be declared to the DGII.
Summary of Costs
| Fee | Cost |
|---|---|
| Lawyer/Attorney Fees | 1% to 1.5% of purchase price |
| Notary Fees | 0.5% to 1% of purchase price |
| Property Transfer Tax (3%) | 3% of appraised value |
| Title Registration Fees | ~1% of purchase price |
| Appraisal/Inspection Fees | USD $300 to $500 |
| Bank Fees (if financing) | 1% to 2% of loan amount |
| Home Insurance | USD $1,000 to $2,000 annually |
| Property Tax (IPI) | 1% annually on value above USD $165,000 |
| HOA Fees (if applicable) | USD $50 to $300 monthly |
| Utility Bills (Electricity, Water) | USD $60 to $250 monthly |
| Maintenance Costs | USD $100 to $500 monthly |
| Rental Income Tax (if applicable) | 15% to 25% on rental income |
| Capital Gains Tax (on sale) | 27% on capital gain |
Key Notes:
- Properties below USD $165,000 are exempt from the annual property tax (IPI).
- Legal assistance is strongly recommended to navigate the legal and administrative processes.
- Consider budgeting for ongoing maintenance and utility costs to avoid surprises.
- If you are planning to rent out the property, make sure to account for the rental income tax.
It’s a good idea to consult with a local attorney or financial advisor to get detailed estimates based on your specific property and needs.
