Purchase of Real Estate by Foreigners
There are no restrictions on foreigners purchasing real property in the Dominican Republic. Formerly, Decree 2543 of March 22, 1945 and its amendments required that foreigners obtain prior Presidential approval except in certain cases. Decree 21-98 of January 8, 1998 abolished this regulation and established as the only requirement that the Title Registry Offices keep a record, for statistical purposes, of all purchases made by foreigners.
Inheritance of Real Estate by Foreigners
There are no restrictions on foreigners inheriting title to real property in the Dominican Republic. Inheritance taxes have been recently lowered to 3% of the appraised value of the estate. If the beneficiary resides outside the Dominican Republic, inheritance taxes are subject to a 50% surcharge, raising the tax rate to 4.5%.
Inheritance of real estate is governed by Dominican law which provides for Aforced heirship@: part of the inheritance must go to certain heirs by law. For example, a foreigner with a child must reserve 50% of the estate to that child despite the existence of a will or of the law of his country of residence. To avoid the application of Dominican rules of inheritance to the estate, it is advisable for foreigners to hold real estate indirectly through a holding company.
Off Shore Holding Company
In the Dominican Republic it is highly recommended to buy property under a corporation, due to the following reasons:
Assets protection, less taxes payment and easier procedure to resale it.
1. Your personal liabilities, both in the Dominican Republic as in your country of origin or residence, will not affect the property held by the corporation. If you by the property under your personal name it will be affect.
2. If you would like to sell the property, you would only have to sell the shares of the company. It permits a simple and quick resale of the property. Since it’s much easier and less expensive (taxes) to resell all the shares of the holding corporation that owns the property, than it is to transfer the real estate. It’s an advantage for the future buyer and for the seller.
3. In case of your death, it simplifies the handling of the estate and the transfer of control to the heirs. Under Dominican law, inheritance of real property is governed by local statute which establishes that part of the estate must go to certain heirs by law (for example, a foreigner with a legitimate child must reserve 50% of the estate to that child irrespective of the existence of a will or of the law of his country of residence). This rule does not apply when ownership of real estate is held by a corporation. Also, if the title is in the name of one or several individuals and one of them dies, the procedure to change the title to the heirs is cumbersome and time-consuming.
We offer Dominican and Offshore shelf companies, most of foreigners that are buying properties in the DR, do it through an offshore company, due to the simple procedure and only requires one, two or three shareholder, in case you are interested or would like more information, just let us know.