DR capital gains: cleaner than most places

Capital gains tax on real estate in the Dominican Republic is 27% on the net gain, regardless of residency status. The math is straightforward, but the basis calculation can save (or cost) you tens of thousands.

How the gain is calculated

Net gain = Sale price minus (Purchase price + Improvements + Selling costs)

The DR tax authority (DGII) accepts the basis as the value declared on your original Title transfer. If you bought at $250,000 and sell at $400,000, your apparent gain is $150,000 and your tax is $40,500 (27%).

What counts as deductible basis

• Original purchase price (per Title)
• Documented improvements: renovations, additions, furniture (with invoices)
• Closing costs from the original purchase (transfer tax, legal, registry)
• Selling broker's commission (typically 5-6%)
• Selling-side legal fees

Keep every invoice. If you renovated kitchen and bath for $35,000 over five years, that comes off the gain. No receipts, no deduction.

Inflation adjustment

DR allows a basis adjustment for inflation. This is the most-missed deduction by foreign sellers. If you bought 8 years ago at $200,000 and DR cumulative inflation was 30%, your adjusted basis is $260,000 before any improvements. This single step often cuts the tax bill 20-30%.

Non-resident sellers

Same 27% rate. The buyer's attorney withholds the tax at closing and remits to DGII. You won't see the proceeds until the tax clears. Plan accordingly.

Sale through an SRL

Profits inside the SRL face the same 27%. Distributing those profits to you as a foreign owner triggers a 10% dividend withholding. Total: 27% + (10% on the remaining 73%) = 34.3% effective. Higher than individual sale in most cases. SRLs win on multi-property income, not on single-property exit.

Home country tax

Most foreign buyers pay tax in their home country too. The U.S. has a tax treaty with DR that prevents double taxation: you get a credit for DR tax paid against your U.S. capital gains liability. Process the credit correctly with a tax preparer who knows both jurisdictions.

When the sale is exempt

• Property held for >3 years and sold for under $100,000 USD equivalent (small-sale exemption)
• Sale to a direct family member at below-market price (still subject to gift tax rules)
• Transfer through inheritance (different ruleset)

What we recommend

Keep a clean expense file from day one. Pictures of every renovation, every invoice, every closing receipt. When you eventually sell, your basis calculation will be ready in an afternoon, not a week.