Selling a CONFOTUR Property in the Dominican Republic: Tax and Transfer Rules

Selling a CONFOTUR Property in the Dominican Republic: Tax and Transfer Rules

Selling a unit that was originally purchased under CONFOTUR (the tax-incentive regime created by Law 158-01 to promote tourism development) is not quite the same as selling a standard resale condo or villa. The exemptions that made the purchase attractive — waived transfer tax, exemption from the annual property tax (IPI) for a set number of years, and income-tax relief on rental returns — are tied to the certified project and its qualified first buyer, not permanently to the physical unit. Understanding what does and does not carry over to your buyer is essential to pricing correctly, negotiating cleanly, and closing without surprises.

This guide walks you through what actually transfers, what typically does not, the documents you will need, the taxes you personally may owe on the sale, and the pitfalls that trip up foreign sellers most often. Laws, thresholds, and administrative practice change — always confirm current figures with DGII, MITUR/CONFOTUR, and an independent licensed Dominican attorney (abogado) before acting.

What CONFOTUR Actually Grants — and to Whom

CONFOTUR is a project-level certification issued by the Consejo de Fomento Turístico under MITUR. When a developer's project is approved, the benefits typically extend to:

• Exemption from the 3% property transfer tax (ITI) on the initial purchase.
• Exemption from IPI (the 1% annual property tax) for a defined number of years from project approval — commonly cited as up to 15 years, but the exact term is set in the resolution for that specific project. Verify the residual period.
• Income-tax relief on qualifying tourism-related income for the developer, and in some cases for investors.

Two points foreign sellers often misunderstand:

1. The ITI exemption applies to the first titled buyer who acquires directly from the certified developer. When you resell, your buyer is almost always treated as a standard resale purchaser and will owe the 3% transfer tax on the higher of the contract price or the DGII appraisal.
2. The IPI exemption is time-limited and attached to the CONFOTUR resolution, not to you personally forever. Whatever years remain on the project's exemption period can, in practice, continue to benefit the property until the term expires — but this is administered by DGII and is not automatic. Your buyer's attorney should confirm the remaining term in writing.

Can You Transfer CONFOTUR Benefits to the Buyer?

This is the single most common question, and the honest answer is "partially, and not the ITI exemption."

• Transfer tax (ITI) exemption on resale: Realistically, no. The exemption is designed to incentivize the initial capitalization of the certified project. A secondary-market sale between two private parties generally triggers the standard 3% ITI, payable by the buyer to DGII.
• Remaining IPI exemption years: Often yes, in the sense that the property continues to enjoy whatever residual exemption the CONFOTUR resolution grants until it expires. This is a genuine marketing point — a buyer stepping in with, say, several years of IPI exemption remaining is receiving real value.
• Income-tax benefits on rental income: Ask your accountant. These are structured around the project and the taxpayer's status, and they do not automatically follow a resale buyer.

Do not market your unit as "CONFOTUR benefits fully transferable." That overstates the law and creates liability if the buyer later feels misled. Instead, list the specific residual benefits, in writing, with the CONFOTUR resolution number and expiration date.

Documents You Will Need to Sell

Assemble these early — a well-prepared file shortens closing dramatically:

• Certificado de Título (the modern deslindado title under Law 108-05) in your name.
• Copy of the original CONFOTUR resolution for the project (obtainable from the developer or MITUR) and any individual certification issued to you.
• IPI status certificate from DGII confirming no arrears and documenting the remaining exemption period.
• HOA/condominio good-standing letter and copy of the reglamento.
• Utility bills (CDEEE/EDE, water, internet) showing accounts current.
• Original purchase deed (Contrato de Venta) and proof of the price paid — you will need this to compute capital gains.
• Records of capital improvements with invoices (these increase your cost basis).
• Cédula or passport, and for non-residents, an RNC (tax ID) if you did not obtain one at purchase.
• If selling through an SRL or offshore vehicle: corporate documents, RNC, and recent shareholder resolutions authorizing the sale.

What You Will Pay as the Seller

Buyers usually cover ITI and title-registration fees. As the seller, budget for:

• Real-estate commission, typically negotiated in the 5–8% range plus ITBIS (VAT) on the commission. Confirm the current ITBIS rate with your agent.
• Your own attorney's fees — pay for independent counsel, not the buyer's or the developer's lawyer.
• Capital gains tax on the gain. This is where the most damaging misinformation circulates. Capital gains on real estate for individuals is NOT a flat 27%. It is taxed as ordinary income on a progressive scale (roughly 0% to 25%) for individuals, computed on the inflation-adjusted gain (original cost basis is adjusted for inflation using DGII coefficients, then subtracted from the sale price). The 27% rate is the corporate rate, applicable if you hold the property through a Dominican company. Have a contador (Dominican accountant) run the actual number based on current-year brackets and inflation factors published by DGII.
• Any IPI, HOA, or utility arrears — clear these before closing or they will be deducted at the closing table.

The Closing Process, Step by Step

1. Price the unit realistically. Foreign sellers often anchor to the developer's current pre-construction pricing in the same complex; resale buyers benchmark to actual closed sales. Get a broker's market analysis.
2. List and market. Disclose the residual CONFOTUR benefits accurately, with documentation.
3. Promise of Sale (Promesa de Venta / Contrato de Promesa). Once a buyer is committed, sign a bilingual promise of sale with a deposit (commonly around 10%) held in escrow. This document should specify the CONFOTUR representations, the closing timeline, and default remedies.
4. Buyer due diligence. Expect the buyer's attorney to pull a current certification from the Registro de Títulos, verify no liens or mortgages, and confirm IPI status.
5. Final deed (Contrato de Venta Definitivo) signed before a Dominican notary.
6. Buyer pays ITI to DGII and files the deed with the Registro de Títulos to obtain a new Certificado de Título in the buyer's name.
7. You file capital gains with DGII on your next tax filing, or via the withholding/settlement mechanism your accountant recommends.
8. Notify the condominio and utilities, and transfer keys and warranties.

Plan for 6 to 12 weeks from signed promise to registered new title, longer if the property still needs a deslinde (individual survey) or has any title irregularity.

Common Pitfalls

• Assuming ITI exemption transfers. It generally does not. Address it clearly in negotiation.
• Marketing "15 years of IPI exemption" when only a fraction of that term remains. State the expiration date.
• Selling through the developer's lawyer. Their loyalty is not to you. Retain independent counsel.
• Underdeclaring the sale price to reduce the buyer's ITI. DGII uses the higher of contract price or its own appraisal, and underdeclaration exposes you to fines and complicates your own capital-gains basis on any future property.
• Ignoring inflation adjustment on your cost basis, which usually reduces the taxable gain meaningfully.
• Forgetting the 60-meter maritime zone (Law 305 of 1968) if any part of the property is coastal — that strip is public, inalienable land and cannot be sold, regardless of CONFOTUR status.

Short FAQ

Does my buyer keep the IPI exemption? Typically the property retains the remaining years of the project's IPI exemption until the term in the CONFOTUR resolution expires. Confirm with DGII in writing.

Can I sell to another foreigner without special permission? Yes. Foreign ownership rights derive from constitutional equal treatment (Articles 25 and 221). Prior presidential-approval requirements were abolished by Decree 21-98. There is no border-zone ownership ban.

Am I taxed on the full sale price? No — you are taxed on the inflation-adjusted gain, at individual progressive rates (or 27% if held through a company). Get a contador involved early.

Should I sell through my Dominican SRL or dissolve it first? It depends on tax residency, ITBIS, and buyer preference. This is a decision to make with your accountant, not a broker.

Laws, thresholds, and administrative practice in the Dominican Republic do change — verify current figures with DGII, the CONFOTUR resolution on file at MITUR, and an independent licensed Dominican attorney before you sign anything.