Real Estate Advisor
Advanced Diploma Real Estate
Masters of Law (LLM)
The way Real Estate operates here in Punta Cana Real Estate is that there are many different brokers who all have access to the same properties that you will find on Point2. It is slightly different than how it works in the US/Canada/ Europe in terms of exclusivity of properties. There is the only exclusivity of properties in the rare occasion that an owner specifically requests and signs a contract to say that only one brokerage can show the property. This openness between Brokerages is done in order to avoid a conflict of interest with many brokers working with the same client. If there is a property listed with another agency or Brokerage, we simply operate under what is known as a “handshake agreement” where we show the property on behalf of the other agent.
Re-sale v New Development
With regards to deciding between a re-sale or a Pre-Construction development, there are pros and cons to both. The main pro to re-sales is that they are typically fully furnished and turn-key ready. Many are already in vacation rental programs with guaranteed income and you have the opportunity to physically walk the layout, see the views, and where the sun sets against the development. The cons are that any immediate return of investment for buying pre-construction direct from the developer are lost, the décor and furniture may not be to your liking and there may be maintenance concerns that are no longer under warranty.
With regards to buying pre-construction, the pros are that as you are buying direct from developers they can often give a deferred or discounted payment plan during the lifetime of the construction. You have the ability to make amendments and choose your internal designs, and the most important pro in the Dominican Republic is CONFOTUR, which I have explained in a little more detail below. The cons are that you have to wait and therefore aren’t immediately able to enjoy the investment, you also are unable to take a test run in the development staying for a week or so to get the feel.
If you purchase directly from the developer, you would also be entitled to CONFOTUR. With CONFOTUR, the developments that meet the criteria are under this Law’s umbrella and so free from this tax. So, If the property you want to purchase costs US$200,000 for example, you would have to pay a single payment of 3% of the property value (US$6,000). But if the development is protected by CONFOTUR, which Playa Coral is then this tax won’t be applicable for you. You are already saving yourself 3% of the purchase value (for closing purposes) in your investment in Punta Cana.
Another tax payment that is exempted by CONFOTUR is Property Tax. This Tax represents 1% of the exceeding value of RD$ 7,438,197.00 (about US$148,000.00), of the complete patrimony of each taxpayer and it’s paid on a yearly basis. Properties and developments under CONFOTUR are exempt of this 1% property tax for up to 10-15 years.
Tax Exemption Summary:
• 0% Transfer Tax – Exempt from paying 3% transfer tax.
• 0% Transfer Tax – Exempt from paying 1% property tax over the tax base amount.
• 0% Income Tax – Exempt from paying 20% income tax on rental income received.
• 15 Year Benefit – The above exemptions run for a period of 15 years.
Owner Financing (receiving finance from the owners of a re-sale property)
- You will need approximately 50% of the purchase price as a down payment, plus the legal fees (contracts) of about $1,500, the one-time 3% transfer tax on the selling price amount (3% of the agreed selling price). A legal contract will be drawn up and notarized detailing that the 50% balance will be financed directly with the owner for a period of up to 5 years. The rates for owner financing tend to be at a rate of 5%.
DR bank financing for overseas investors
- This is a possible but very lengthy process due to the cross-country jurisdictions. Banks finance up to 70% for overseas investors that a Very Good or Excellent Credit score in the home country. Mortgage rates are high, typically on a variable of 8-12%. You will need to scan and send the following documents to the bank, or you can wait and physically bring them if you prefer:
- Americans: TransUnion Credit Report / Canadians: Equifax Credit Report
- A copy of your passport
- Social Security / National Insurance Number
- Documents showing your income tax for the last two years – such as work payslips or self-tax assessment
- If you are currently employed you will require an employment letter from your current employer
- If you are not employed you will require proof of funds to maintain yourself or proof of pension receipts (generally they will want to see a NET income of at least $2,000 USD) monthly
- Proof of any other incomes – such as income generated from a rental property or business in your home country
- 6 months Bank Statements
Developer Financing plans payable during the term of your construction
- If you are buying a pre-construction property then many developers offer to finance while your unit is being built. This is often at 0% and is a great option allowing you to slowly pay until the time is right for it to be ready and for you to move in. You will typically require a small deposit of under $5,000 USD followed by payment of 20% of the cost of your property in 30 days. Once you have chosen a unit you can request a payment plan that suits you. Typically payments can be monthly or every 3 months until the balance is paid. These tend to be from 6 months to 3 years and are a great option for financing a modern home if you are not ready to move immediately.
- Equity release from your home country
Currently the preferred option by most of our clients. Liquidating assets from your home country from property or business to purchase cash in the Dominican Republic. They tend to buy tax-free modern properties so their investment is not subject to tax.
- Applying for an overseas mortgage from your own country
This option is the rarest of the five options and will take some investigating in your home country. There are lenders that do offer overseas mortgages, they generally will require you to undertake certain protocols according to their bank requirements.
For any further Information; I remain available at your service via email, WhatsApp, or telephone:
1809 836 2909
Contact Us with your questions and advisory services required.