What it really costs to buy a home in the Dominican Republic

When someone tells me "I have ten million to buy a home", the first thing I do is correct the math. The price of the home is not the only thing you will pay: between taxes, legal fees and bank costs, a purchase in the Dominican Republic usually costs between 4% and 6% more than the agreed price.

It is not a number to be afraid of, but it is one to keep in mind from day one. Here is where each cost comes from.

The transfer tax

This is the largest cost. It equals 3% of the property's value and is paid to the tax authority (DGII) before the title is registered in your name.

One important detail: the 3% is calculated on the higher of the sale price and the DGII's own appraisal. If you buy below the appraisal, you pay on the appraisal.

By custom the buyer pays it, although it can be negotiated. Some tourism projects approved under CONFOTUR (Law 158-01) are exempt. If you are interested in one, it is worth confirming before you make an offer.

Legal and notary fees

Plan on about 1% to 1.5% of the price. They cover the work that protects your money:

• Checking that the seller is the owner and that the property has no mortgages, liens or debts.
• Requesting the certificate of the property's legal status.
• Drafting the promise of sale and the final contract.
• Notarizing the signatures and filing everything with the Title Registry.

This is the cost you should least try to cut. A problem with the title costs far more than a careful review.

If you buy with a loan

The bank adds its own costs:

• Appraisal. The bank sends an appraiser to confirm the home's value. It is a fixed fee, paid even if the loan is not approved.
• Mortgage registration. A tax of 2% of the loan amount.
• Bank fees and closing costs. They vary from bank to bank, so ask for them in writing.
• Insurance. The bank requires life insurance and property insurance, paid together with the monthly payment.

Remember the down payment as well. Banks usually finance up to 70% or 80% of the value, so the rest, plus the costs, comes out of your pocket.

An example with numbers

Let us take an apartment priced at RD$10,000,000, with a DGII appraisal below the price.

If you pay cash:

• Transfer tax (3%): RD$300,000.
• Legal and notary fees (1% to 1.5%): RD$100,000 to RD$150,000.
• Approximate total: RD$400,000 to RD$450,000, that is, between 4% and 4.5% of the price.

If you finance 80% (RD$8,000,000):

• Add the mortgage registration (2% of the loan): RD$160,000.
• Plus the appraisal, the bank fees and the first insurance payment.
• Approximate total: around 6% of the price.
• You also need the down payment: RD$2,000,000.

In other words, to buy that apartment with a loan, you should have about RD$2,600,000 available on closing day, not RD$2,000,000.

The costs that come later

The purchase does not end with the signature. Keep in mind:

• The IPI. The property tax (Impuesto al Patrimonio Inmobiliario) is 1% a year on the value above the exempt amount the DGII sets each year. Many homes never reach it.
• Maintenance. In a condominium, a monthly fee is paid to the building's management. Ask how much it is before buying, and whether any special assessments have been approved.
• Utilities. Transferring electricity and water to your name may require a deposit.

How to avoid surprises

1. Set aside an extra 6% of the price if you will finance, and 4.5% if you pay cash.
2. Ask your lawyer for a written breakdown of every cost before signing the promise of sale.
3. If you will finance, get pre-qualified by the bank before you start looking. You can estimate your payment with the mortgage calculator.
4. Read the buyer's guide, where I explain step by step how a purchase works.

If you have a property in mind, I will gladly work out the numbers for your case.