To go through the process of Due Diligence,
the following documents will need to be supplied to the attorney by the seller.
a) the Title Certificate of the property
b) the property survey or plan
c) a copy of the ID card or passport of the seller
d) documents showing that the property is either current with tax payments or exempt from payment of tax
e) corporate documentation and authorization to sell (if applicable)
f) condominium regulations and declaration (if applicable)
Special note: Golden Treasures Real Estate will also request utilities bills showing that the property is up to date with payments of power, telephone and other services.
The property Sales Contract (which details the legal property description with price and any other conditions) will need to be signed by the seller and the buyer at an attorney's office, who will then notarize it. If the seller is married, the spouse will also need to sign this.
The nearest Internal Revenue Office will need to value the property. Payment of taxes are made to this office including the transfer tax (see below for information on this), if applicable.
Documents received from the Internal Revenue Office, along with the Certificate of Title, the Sales Contract and copies of identification of both the seller and the buy are taken to the local Title of Registry office where the sale of the property is recorded.
The Title of Registry office issues a new certificate of Title in the name of the new owner and cancels the previous Certificate of Title. This particular part of the process can take anywhere from a few days to several months depending on the office. The new deed would normally be received within 90 days.
Dominican Republic Property Taxes
There are two types of tax for Dominican Republic properties. The first one is the transfer tax and a one-off tax applied when a property is first purchased. It is calculated at 3% of either the sales price or the price that the Inland Revenue valued the property at – whichever is the higher.
The 2nd tax payable is the annual property tax which is 1% of the value of the property ( if applicable ). Dominican Republic companies are exempt from paying property tax in this method, as they pay asset tax. They also do not pay the transfer tax as the property would be transferred as a 'share'. For this reason there is a vast majority of foreign investors who will prefer to set up a corporation for the purposes of avoiding charges. Setting up a corporation costs about US$1,000.00 and it saves you a lot of money in the short and long run.
Other payments that the buyer will need to pay for legal obligations could amount to 1% of the value of the property in addition to these fees to cover stamps and other duties etc.
Inheritance of Dominican Republic Property
Dominican Republic property can be inherited by foreigners. Inheritance tax is 3% of the value of the property if the subject lives in Dominican Republic, and 4.5% if they reside outside. However, this can be raised to between 17% and 32% of the estate if there is more to the 'estate' than one primary property.
If you decide to purchase directly from the owner, there are some things that you should keep in mind. There is no real estate or governmental body that sends real estate and property tax reminders to owners if these fees have not been paid. If an owner does not pay these dues, the government will ensure they collect any arrears at the time of sale, if not up to an additional 50% penalty on these arrears as well, before enabling the title of the property to be transferred. This could prevent the sale from happening if the seller does not have the money to pay these arrears (and any penalties), or, depending on what has already been transacted between the buyer and the seller, put the buyer in a position to pay any outstanding dues before obtaining title of the property. To prevent this from happening, ask the seller to provide proof of the previous tax payments that have been made on the property.
A seller should always be able to provide you with at least a photocopy of the title to the property so that you can verify with the titles office that the title is good and that there are no liens against the property. It is also wise to have the seller provide a recent copy of the tax assessment of the property, matching it against the title to ensure it fully describes the property and all of its buildings. If the title office has only registered the piece of land, and a home or building was built afterwards without being registered, you could be liable for the arrears in taxes on this home or building since it was built.
If you are looking into purchasing a new residential property, the developer may not be able to provide you with anything but a photocopy of the 'master title' for the entire development. This is okay, but you will need to also complete a 'contract of sale' if you decide to purchase, to make your purchase legal and binding. Ensure the 'contract of sale' is notarized by an Attorney and is filed properly with the applicable department. Once the entire project is completed, the developer cancels the 'master title' in exchange for providing individual land titles to each of the project's buyers. Once the development is completed, the developer should provide you and all other buyers with an individual land title for your portion of the project, but to be sure, at the time of sale, along with the 'contract of sale', you should get an agreement in writing from the developer stating he will provide your individual land title in no longer than one year's time. If the developer is unwilling to do so, you should be skeptical about buying the property. Real Estate in the Dominican Republic can be your best best if done with a professional real estate company.