How to Buy a real property in Dominican Republic

Throughout our career of more than 15 years as a Law professional and more than 10 years as a professional specialized in real estate and foreign investment, I have reached the following conclusions: a) the most important factor for an investor is to work with a professional who has deep knowledge of expertise in these areas; b) not only the expert professional should know the language of the investor; this is important, but without having still a great knowledge of the investor’s language, the expert dedicated to investing in real estate must know the customs and the habits that are held in the country where the foreign investor makes his/her investment; c) it doesn’t exist nor it shouldn’t exist such a thing as free legal advice; rather our firm focuses itself in providing free guidance, or a guide or a map in order to be able to invest with the lesser possible risk.


Our clients have taught to us. We have only put the ears in their complaints, needs and wants, regarding that the best way to serve their interests is generating alternatives so that they by themselves can choose that option who they consider correct and that fills their expectations. In other words, to know and to act.

The following lines summarize what in our opinion really represents the greatest interests of the investors at world-wide level, and at the end the aspects in which we give advice to focus at the time of taking into account how to make a foreign investment.


Firstly, it is evident that when leaving a country, where we know the laws, it is very important to eliminate all type of uncertainty regarding the political and social stability of the destiny country of our investment. Secondly, we must know that when we make a change in our destiny of investment, placing our money in another country, it is the rules of this new destiny the ones that reign and, therefore, we must allow an efficient professional expert to take us by the hand; an expert professional who knows the economic, social, political and cultural environments of the country where we are going to make the investment.


It is necessary to look for the alternative that is less expensive in the short term, but that does not put at risk the investment in the long term. That is to say, if we must incorporate a company, it is better that this company belongs to a reliable jurisdiction, and it should have a low budget. You must ask your lawyer on the necessity of registration of this company in the country that it is the object of the investment; in this case, the Dominican Republic.

This takes us to the following topic. A comparison among the different types of incorporation or constitution of companies for foreign investors. That is to ask: isn’t a foreign investor better protected by the local laws? Isn’t it better, then, that the company or society that is going to protect his/her investment belongs to the destiny country of the investment? Can I incorporate a company that it doesn’t belong to the Dominican Republic to buy a property?

Another question would be: Do I have to incorporate a company? The answer is yes. It is not mandatory, but after giving legal services to many clients in this area we are convinced that the less risky way to protect a purchase is through a society or company.

In the last years, the Dominican companies have increased a lot in their costs of incorporation. In addition, the tax laws have modified a lot the kinds of maintaining or keeping up to date the companies with the Dirección General de Impuestos Internos (DGII) (IRS in the United States of America). Consequently, the incorporation of a Dominican company can be a trap due to the high cost that it can have at the moment of its constitution. It is possible to be said that with a small capital for incorporating the company, for example, 100.000,00 pesos of capital versus the value of the investment, the company can be economical for the investor. Nevertheless, the trap is in the monthly maintenance of the companies, and in the fact that it could be considered as tax evasion over the social capital or the difference between the investment and the company’s capital. Consult with your lawyer on this matter.


For us, the best options regarding to foreign investment are found in the jurisdictions called “tax havens”. The jurisdictions that we recommend are, of course, BVI, Panama, Anguila and lately Belize. These companies are of fast constitution, they do not require of so many shareholders as in the Dominican companies, and through them there is greater control of the investment. By control, we are talking about handling with ease the company through a Board of Directors that allows to name up to a single Director of the company.


There is a necessary comparison among the structures of U. S. companies of reduced risk to special capital LLC and Dominican companies or foreign companies of jurisdictions called “tax havens”. This comparison raises an important point, and it is the objective or destiny of the investment. In general, we like to think that an entrepreneur or investor has greater yield if he/she tries to maintain his/her investment as a foreign investment in the Dominican Republic in order to avoid the risk that implies double taxation. In effect, when companies of American origin are constituted, it is essential to declare them in the United States and then to register them here; so the company will have to pay taxes both in the United States and in this country, the Dominican Republic.


As a general rule, we would say that -for investors with money originating by a trust or another type of investment structure that forces them to be transparent in all its operations immediately- it is better for them to constitute their companies in their country of origin; in this case, we have used the United States as an example. For those who pursue a greater benefit, we understand that the advisable thing is the constitution of national companies or special jurisdictions, such as Belize, Anguila, BVI or Panama.


Numerous aspects must be considered by the foreign investors concentrated in the area of tourism real estate. We summarize the most important as follows: a) the transaction contract that has to be reviewed by a lawyer; b) “due diligence” or previous investigation on the taxes that could affect the tax property, and on the possible charges or mortgages that the building has; c) if it does not exist a title certificate, it is necessary to investigate the state of the segregation of the land or delimitations to protect the investment; d) flat cadastral or “survey”; e) construction permissions that could affect the development; f) possession of the building; and h) employees in the case of properties already developed and that require maintenance.


In the still much more specialized segment of preconstruction, the investor must look for a professional who helps to solve or to answer basic investment questions such as: a) who is the developer and what is his/her reputation in the market?; b) what type of protection offers the Dominican laws for the constructions (protection against hidden vices or defects in the construction)?; c) which options do I have as an investor when I rent my property?; d) what type of taxes do I have to pay in the form of rents?; e) which are the benefits to give my property in administration? ; f) how can I obtain financing for my property in the Dominican Republic?; and f) which are the maintenance costs?


A last aspect to consider in the investment is the risk and the suitable type of investment that are more to our interests as investors in the Dominican Republic. On this point, we refer to the classic ideas of investment in real estate in general that they suggest drawing up to the plans and goals of investment starting off from the following parameters: a) financial resources. As a general rule, while more resources or liquidity are controlled, the possibilities of investing in rent properties are greater in the first place, and then in apartments or lots located in strategic sites; b) if our objective is on the contrary to involve us little in the handling of the companies, then it is always suggested -taking the factor of liquidity in account- the investment in land or lot and in apartments or houses is recommended after that one. In apartments, if they do not require of much maintenance, and in houses depending, as always, of the location of them; c) finally, for those investors looking for greater risks by all means and more long term yield, the first option always will be the land investment located in areas of growth like the lands of Bávaro and Cabarete. Our readers can get more information on this subject in the extraordinary book written by William Benke and Joseph M. Fowler entitled “All About Real Estate Investing”.