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The cost of buying a private villa is usually pretty straightforward, where the buyer has a clear image of the cost. When signing the contract, buyers know the price of purchasing the lot, designing the home and constructing the villa, but what about governmental fees? Every government has its own legal fees and taxes when it comes to buying real estate. Below is everything you need to know about the governmental fees of purchasing Dominican Republic private villas.
1. Legal Fees
As every government implements different rules and regulations on buying real estate, it is strongly recommended that all prospective buyers retain a real estate attorney, or a solicitor, before signing documents or making an agreement. When purchasing a villa in the Dominican Republic, buyers are subject to pay legal fees to their lawyers in order to cover the expenses of due diligence, disbursements and transfer of title fee. Typically, an attorney will charge buyers between 1% and 1.5% of the purchase price to cover the costs of the legal fees and ensure that all your legal paperwork is in place.
2. Property Transfer Fee
Buyers will also be subject to paying a property transfer tax fee which is 3% of your property value. The 3% transfer tax is usually less than the market value, depending on your purchase price. When paying the property transfer tax fee, buyers are ensured that the title of the property is legally transferred from the sellers to the purchasers. Generally, buyers would be responsible for paying from $2000 – $6000 USD, which is the amount based on the property’s value that the Dominican Republic government assesses.
3. Real Estate Tax Fee
As appraised by the Dominican Republic government authorities, real estate properties owned by individuals are subjected to pay a 1% annual tax that is based on the combined value of all the properties they own. Property owners should only pay the 1% yearly tax fee if their property value exceeds 6,858,885.00 DOP (around $150,000 USD). As a villa owner, your property value is assessed without calculating the value of any furniture or equipment within the property. If your villa is not yet built, but you are the legal owner of the property, then the 1% tax will be calculated on the current appraised value of your property without any exemptions.
You can pay the real estate tax fee every year at one go on March 11th or before that date. If you prefer to pay the fee in installments, you can pay 50% before March 11th and the remaining 50% before September 11th. Due to inflation, the amount of exemption is generally adjusted annually for all property owners. If your property falls under any of the following circumstances, then you are exempt from paying the 1% real estate tax fee:
- Farm Properties
- Properties owned by companies; therefore, pay a separate tax on their company assets
- Homes whose owner is 65 years or older and has no other property in their name
Want To Learn More About Owning Dominican Republic Private Villas?
Contact us today to learn more about purchasing a private villa in the Dominican Republic and how to start your journey to become a property owner. If you want to know more about the hidden costs of purchasing a property from a real estate company, check out part 1 of this blog!