-There must be an agreement with regards to the price and the conditions of the sale between the person interested in acquiring the property and the owner. We recommend that the buyer choose a law firm or notary to assist him in presenting his purchase offer.
-This law firm or notary performs due diligence by checking the legal status of the property prior to signing the agreement of sale or promise of sale, as well as the situation regarding property tax of the real estate.
-Unlike the signing of the final sales agreement with which the transfer of property rights is done, the Promise of Sale is the document used to regulate the conclusion of a future contract, which cannot be concluded in the present for any number of reasons.
-This contract involves the details of the identities of the parties, description of the property, purchase price, manner and time of payment, warranties, and causes for termination of contract, etc.
-This agreement is binding between the parties and should be signed in the presence of a notary lawyer, as the buyer deposits a sum of money in order to reserve the property he wishes to purchase and the seller reserves the property and is committed to sell to buyer who has demonstrated that he is interested.
Taxes, Expenses and Legal Fees on Property Transfers
Taxes must be paid before filing the purchase at the Title Registry Office. Taxes and expenses on the conveyance of real estate are approximately 3.1% of the government-appraised value of the property, as follows:
• 3% Transfer Tax (Law # 288-04)
• Minor expenses such as cost of certified check required to pay taxes to Internal Revenue, sundry stamps and tips at the Registry.
Taxes are paid based on the market value of the property as determined by the tax authorities, not on the price of purchase stated in the deed of sale.
As for legal fees for real estate transactions, the standard is 1 to 1.5% of the gross purchase price, depending on the complexity of the purchase, with a minimum for properties valued at $150,000 or less, and a discount for properties valued at more than a million dollars.
Property Taxes
A 1% annual tax is assessed on real estate properties owned by individuals, based on the cumulative value of all the properties as appraised by government authorities. Properties are valued without taking into consideration any furniture or equipment to be found in them.
For built lots, the 1% is calculated only for values exceeding 7,019,383.00 DOP (about $150,000). For unbuilt lots, the 1% tax is calculated on the actual appraised value without the exemption.
The real estate tax is payable every year on or before March 11, or in two equal instalments: 50% on or before March 11, and the remaining 50%, on or before September 11.
The amount of the exemption is adjusted annually for inflation.
The following properties are exempt from paying real estate tax: (a) farm properties; (b) homes whose owner is 65 years old or older, and has no other property in his or her name; and (c) properties owned by companies, which pay a separate tax on their company assets.
Purchase of Real Estate by Foreigners
