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The Dominican Republic Housing Market Vs. The Pandemic
Interest in Dominican Republic’s property market is rising fast again, following a temporary slowdown due to pandemic-related travel bans.
What I’m hearing now is an uptick in inquiries about the second home market,” said Anders Bogebjerg, owner of local real estate firm Group Palmera. “Interest really hasn’t slowed down with COVID. A lot of people are asking, especially from New York Area and Florida.”
Barbara Warren of Noval Properties said that the pandemic actually did the contrary. “There has been a boom in residential [investment] due to the [coronavirus pandemic] and the fear of large crowds,” Warren revealed. “There has been a significant uptick in sales of turnkey-ready properties.”
These claims were supported by Lucien Echavarria, director at the Ministry of Tourism of the Dominican Republic. “Interest in real estate in the Dominican Republic, particularly Punta Cana, remains high because smart investors know the DR is the type of destination travelers are looking for now,” said Echavarria. “It is close and has a strong, stable government.”
The Dominican Republic’s residential property market has grown rapidly in recent years, thanks to robust tourism growth and the arrival of luxury international and boutique hotels, coupled with strong economic fundamentals.
“Tourists come for the surfing and the windsurfing, and many of them end up buying homes here too,” says Josefina Covents of the Cabarete-based agency Josefina Covents y Asoc. There are no restrictions on foreigners buying property.
Aside from its reputation as a tax haven and long stretches of sandy white beaches and a balmy temperature, foreign homebuyers are attracted because a property is still a bargain, relative to the rest of the Caribbean. A newly-built one-bedroom apartment near a beach can be bought for just US$150,000 or less.
Foreign property investment is also encouraged by incentives, which according to the country’s tourism office, include:
Tax-free receipt of pension income from foreign sources, including moving belongings to the country, is guaranteed (Law 171-07 on Special Incentives for Pensioners and Persons of Independent Means).
Foreign buyers receive a 50% exemption from property tax
Exemption from taxes on dividends and interest income, generated within the country or overseas
Foreign buyers receive a 50% exemption from taxes on mortgages, when the creditors are financial institutions regulated by Dominican financial monetary law
Exemption from payment of taxes for household and personal items
Exemption from taxes on property transfers
Partial exemption on vehicle taxes
Developers are relieved of all national and municipal taxes for ten years, including the tax on the transfer of ownership to the first purchaser of a property, by Law 158-01 on Tourism Incentive.