Dominican Republic June 2016 - Pinellas Realtor Organization

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Dominican Republic June 2016 - Pinellas Realtor Organization
República Dominicana (Spanish)
https://www.youtube.com/watch?v=OPuPRwOdNmQ
Accessible by air – popular tourist destination; beaches & climate
How large is the Dominican Republic?
The Dominican Republic is slightly less than
19,000 square miles in size, about twice the
size as the State of New Hampshire.
Airports ~ Transportation
2 International Airports
Capital:
Santo Domingo - 3 mil
Currency: Dominican peso
Population: DR ~10 million
President: Danilo Medina
Government
The political structure is based on
democratic principles. Every four
years the country elects its
president, vice president and
legislators.
Official language: Spanish
Quick Information at a Glance:
- Average year-round temperature of 82 degrees F.
- 1,000 miles of pristine coastline – some of the best beaches in the world
- Experienced property management and rental programs
- Full ownership and registered titles – no bank trusts
- Outdoor lifestyle with year-round fishing, golf, swimming, diving, sailing, etc.
- Properties with the finest finishing, with equivalent or lower prices than North America or Europe
- All the amenities of home: high speed Internet, telephone, satellite, cable, restaurants, shopping,
banking, schools
- Thriving community of expats who live here full time, and part time
Quick Information at a Glance cont’d:
- The Dominican people are warm, friendly, and welcoming
- In the hurricane belt.
- Safe country (re: violence vs. petty theft) with far lower crime rate than the US,
Costa Rica, Belize, or Mexico
- You do not have to have residency status to purchase property
- Sound democratic government and banking system (Scotia Bank is the largest bank
on the island)
- Excellent medical facilities and trained physicians
- Very tax and investor friendly with no restrictions on foreign ownership.
- Impressive rental occupancies – average 55-80% over the course of the year – your
property can earn an income or carry itself with holiday renters and/or long term
permanent residents.
Four types of Hospitals:
- Public
- local clinics, used by the
local people
- high quality hospitals
and clinics in the tourist
areas
- World class in Santo
Domingo and Santiago
The Dominican Republic
has a reliable and
developed private medical
care infrastructure and it is
strongly advised that expats
take out private health
insurance.
http://www.expatfocus.com/expatriate-dominican-republic-hospitals
Currency – Dominican Peso
Dominican Peso
Symbol: RD$
"RD$" used when distinction from
other pesos (or dollars) is required, the
peso fluctuates freely against the US
Dollar and other foreign currencies.
Coins:
Freq Used: RD$1, RD$5, RD$10, RD$25
Banknotes:
Freq Used: RD$20, RD$50, RD$100,
RD$200, RD$500, RD$1000, RD$2000
Punta Cana is a hot spot for
international tourism.
Most shops, hotels, excursion
companies and restaurants accept
US dollars and Euros.
Opening a Bank Account
• You do not need to be a resident, you will however
need all of the following:
• Your passport.
• Letter of recommendation from your own bank.
• Personal recommendation from a person known to
the bank.
• You may then open a bank account in dollars or
pesos or both.
• Transfer of funds into and out of your dollar
account may be by wire transfer, check or cash.
• The banking system here takes up to 30 days to
clear checks, including cashiers checks or bank
drafts.
How long can I stay in the DR?
Officially, if you plan on spending more than three months per year in the DR, you are expected to obtain your
official residency status. However, the government is not really concerned with ex pats that go back and forth to
their home countries – they are considered “tourists”.
Is the government secure?
Yes. The DR has a long term democratic government. The system is similar to that of the United States.
The government is foreign investment friendly, working at long term programs for education, investing in
infrastructure and technology.
ADMISSION TO THE DOMINICAN REPUBLIC
 In general, Dominican law reflects the welcoming nature of the Dominican people, permitting entry of most
foreign nationals whether visiting for pleasure, business, or retirement. In addition, many foreign nationals
can obtain residency or citizenship by submitting properly prepared documents, completing legal formalities,
and waiting prescribed time periods.
 A foreign national is admitted to the Dominican Republic either as a “nonresident” or
“resident.” Nonresidents are those who intend to stay in the country for a limited time for a particular
purpose such as pleasure or business, and require a visa or tourist card for legal entry.
**A resident is a foreign national who is staying in the country for an extended period and has obtained legal
residency status, evidenced by a residency card.
NONRESIDENT STATUS
• A nonresident foreign national requires permission to enter and stay in the country.
• Foreign nationals arriving from countries that are party to a dispensation treaty, generally developed
countries are permitted entry by a tourist card and do not need a visa.
• Tourist cards are purchased for a nominal amount at one of the country’s international airports at the time of
entry and before passing through customs.
• They are valid for 3 months.
• Foreign nationals who are not citizens of a country covered by such a treaty need to obtain a VISA before
traveling to the Dominican Republic. Application for a visa is made to a Dominican Consulate in the foreign
national’s country of origin.
Residency
Applicants for resident status must be in good health,
have sufficient means and a clean police record.
The application may be filed while the applicant is
present in the country under a tourist card or visa.
A foreign national, who has lived in the Dominican
Republic as a permanent resident for two years or in
certain cases, six months, may apply for Dominican
citizenship (naturalization).
Naturalization is not automatic, but granted at the
discretion of the government.
There is no economic citizenship program in the
Dominican Republic providing for automatic
citizenship upon the investment of certain amount of
funds in the country.
Depending on which lawyer you use, fees for your
provisional residency are approx. $US1,000 per person.
The process to get your provisional residency can take
up to 6 months.
The main advantages for you:
• A legal resident can work and conduct a business in the Dominican Republic.
• A resident is allowed to bring in tax free his household items, ranging from kitchen
appliances, to furniture (Article 13 of Law #146-00). A non-resident must pay
applicable duties on these goods.
• A non-resident cannot sue a Dominican national or a legal resident in court without
posting a bond, usually quite high. A legal resident is exempt from this requirement.
• For many foreigners interested in not paying taxes in their home countries on
income earned outside their home country, it is a pre-requisite to obtain residency
status in another country.
Foreign nationals seeking residency in the Dominican Republic fall into two categories:
a) those who may apply immediately for permanent residency; and
b) those who first must apply first for temporary residency.
The following applicants may apply immediately for permanent residency status without
having to previously obtain temporary residency status:
1) Investors of at least 200,000 USD in local businesses (including free zones and government
contracts) or in local financial instruments.
2) Retirees with a monthly pension of at least 1,500 USD (plus 250 USD per dependent).
3) Applicants with monthly income of at least 2,000 USD for five years or more (rentistas).
4) Applicants related to Dominicans or to foreigners with permanent residency status in DR
(spouses and children).
The application process is essentially the same for both temporary and permanent residency,
except for some additional documents required in permanent residency applications.
EXPEDITED RESIDENCY Law 171-07, enacted July 13, 2007, acknowledges the benefit of
foreign investments to the general and economic well-being of the Dominican people and
nation.
Foreign nationals meeting certain criteria can acquire residency status within
45 working days from the date an application is submitted for inspection at the
Immigration Department (Decree No. 950-01).
Eligibility Criteria
Property owners with rental income, investors, and retirees are eligible to
apply for residency on an expedited basis if certain income requirements and
other specific criteria are met.
The term used to describe this status is “Investment Residency” and is not
always easy to obtain.
The foreign national must submit the same documents required for the normal
residency process, and additional documents that evidence the foreign
national’s eligibility for Investment Residency.
VISAS
Several types of visas are available depending on the purpose of the visit:
Tourist, Business, Work, and Student.
The criteria required for each varies, and the type of visa granted is determined by the
Immigration Department. In addition, the time for obtaining a visa varies depending
on the practice of the particular Consulate.
Visa applications are granted or denied at the discretion of the government. Visas
must be obtained before arrival and are typically valid for three months. They cannot
be obtained while in the Dominican Republic.
Things to Consider When Buying Foreign Property
Security
Rental Management
Government
Medical Services
Titles
Resale
Community
Taxes
Distance to Airport
Builders/Developers
Safety
http://www.drproperties.ca/information/things-consider-buying-foreign-property/
Dominican Republic property offers something for all tastes, lifestyles and budgets in a superb choice of
locations, ranging from city to countryside, beach to mountains and north to south.
Whether you decide for Puerto Plata, Sosua, Cabarete or Cabrera on the North Coast, the Samana
peninsula or Punta Cana in the east, or luxury living in Casa de Campo in the south,
the Dominican Republic has it all.
The Dominican system is very simple and all purchases are viewed equally under Dominican Law.
In reality, this means that whether you are a Dominican or a foreigner, with or without Dominican residency, all
have the same legal rights.
Real estate transactions in the Dominican Republic are governed by Property Registry Law No. 108-05 and its
Regulations, in force since April 4, 2007.
Ownership of property is documented by "Certificates of Title" issued by Title Registry Offices.
Source: Alexandre Houisse, Coldwell Banker Coast to Coast Real Estate
MARKET OVERVIEW
More foreign tourists fly in to the Dominican Republic than any other island in the Caribbean, though the
Bahamas receive just about as many tourists on cruise ships.
Over the past decade, the country had a building boom, much of it fueled by foreign buyers.
Because most of them still pay in cash, the economic crisis has not generated a significant number of
foreclosures.
Even so, it did push prices down by about 20 to 25 percent.
The amount of new development has fallen, by 70 to 80 percent, as a result of skittishness about global financial
troubles.
A lot of people that were going to develop projects have all put them on hold and there’s still very few projects
that are starting at the moment.
Prices, however, have now stabilized, and the market for the few available new homes is strong.
Source: Philip Weiser, managing director of the real estate agency Carlton International
The market for resale properties still has to recover.
There are many middle-range products remaining on the market, but quality properties sell very well.
Source: Sandy Parekh, broker-owner of Remax Coral Bay Realty
WHO BUYS IN THE DOMINICAN REPUBLIC?
Foreign buyers tend to come from North America and Europe, primarily, although
there are some Russians.
Over the past 10 years, the Dominican Republic has undergone unprecedented
development, attracting investors from France, Switzerland, the United States,
Germany, Italy — and, more recently, Dominicans themselves, together with investors
from South America.
Different parts of the island appeal to different types of buyer.
The south, which has many all-inclusive resorts and condominiums, is popular with
American and local buyers.
The southeast, which includes the huge tourist destination Punta Cana, attracts more
Dominican and Latin American buyers along with Europeans.
The northern coast, home of the easily accessible Samaná Peninsula,
attracts Europeans, North Americans and Dominicans.
BUYING BASICS
• There are no restrictions on foreign buyers.
• A lawyer should handle the sale and act as notary, brokers said. Typically a lawyer charges about 1 percent
of the sale price.
• The Dominican Republic does not license its agents, and novice buyers may sometimes be pressed to pay
unwarranted commissions, so buyers are strongly advised to educate themselves about the market.
• If clients do hire an agent, one option is to work with one from an international franchise.
• That way there’s actually a proper escalation process if you have issues with an agent, whereas if you use
an independent agent, you have absolutely nowhere to go if you have problems.
• Titles are registered to the purchaser(s) of any property, (on both the land and building), or in the case of a
condo, on the individual unit.
• Typically, sellers pay the agent’s commission on a home sale, which may range from 3 to 10 percent.
• Besides the lawyer’s commission, fees paid by the buyer include a 3 percent transfer tax and a 1.3 percent
document stamp tax.
• Property in the Dominica Republic is fully owned and titled. There are no bank trusts or life leases.
Property is registered to buyers either in their personal names or corporately, depending on how they have
structured their purchase. Unlike many Caribbean countries and Mexico, the title system in the DR is
similar to what people are used to in North America and most of Europe.
• Until recently, almost all foreign buyers paid in cash, as local banks offered mortgages in Dominican pesos
only.
• Recently, some banks have started offering mortgages in American dollars with interest rates starting at 8
percent.
Source: Alexandre Houisse, Coldwell Banker Coast to Coast Real Estate
What sort of monthly costs are associated with operating a DR property?
General running costs like utilities, condo fees, etc. are standard like anywhere.
Some fees are optional like housekeeping, etc. Below is a basic breakdown of costs
for running a 2-bedroom villa (with all services). Condos are generally less each
month.
AVERAGE MONTHLY COSTS:
• Subdivision/Condo Fee $200- $320/month (includes cable, security, water, outside
lighting, maintenance of common areas, garbage, onsite office)
• Pool/Yard Service $250/month
• Electricity: (average $100/bedroom per month if rental unit)
• Propane: $20- $30/month depending on usage
• Misc: (consumables and maintenance) $100/month estimate (if villa, less if condo)
How much are property taxes?
• A 1% annual tax is assessed on property owned by individuals.
• For constructed property the 1% is calculated only for values exceeding 6.5 million
pesos ($151,000 US).
• This is based on the government assessed value, which is generally less than market
value.
• Properties owned corporately pay 1% of the government assessed value of the assets
of the company.
• For unbuilt lots, the 1% tax is calculated on the actual appraised value without the 6.5
million pesos exemption. The RD$6.5 million pesos threshold is adjusted annually for
inflation.
The following properties are EXEMPT from this tax:
(1) Built properties valued at RD$6,500,000 or below.
(2) Farm properties.
(3) Properties whose owners are 65 years old or older, who have owned it for more
than 15 years and have no other property in their name.
(4) Properties subject to the Tax on Assets
Dominican Republic Mortgage Financing
There are a few ways:
Canadians and Americans will find the mortgage financing process in the DR similar to that of
their home countries, but much slower, and with more paperwork required at the outset such as
income/tax documentation from your home country, appraisal, etc.
To purchase property in the DR, there are two options:
1. Refinance an existing property in your home country to pay for the DR purchase:
Often a better option as rates are better
More mortgage products are available to you
It takes less time
2. Place a new, first mortgage on the DR property being purchased;
Interest rates are between 7-10%
Amortizations up to 20 years
30% down payment required
The approval process is similar to that of North America, with lenders requiring similar
documentation
You can be self-employed
Requirements to buy Real Estate in the Dominican Republic
There are no restrictions for foreigners to purchase real estate in the Dominican Republic. Before purchasing
property it is recommended to have an attorney investigate its legal status, for which the seller should provide
the buyer with copies of Title Certificate, property survey or plan, his or her identity card or passport,
documents showing that the property is either exempted or up to date with the tax payment, corporate
documentation and authorization to sell (if applicable), condominium regulations and declaration (if
applicable). In order to transfer ownership of real estate the following steps are required:
Signature of the "Sales Contract" before a Notary who will authenticate it. If the seller is married, the spouse
must also sign the Contract of Sale. Contract of Sale will contain the legal description of the property, price and
other conditions.
Appraisal of the property at the nearest Internal Revenue Office and then proceed with the payment of transfer
taxes.
The Contract of Sale and the Certificate of Title of the seller are deposited, along with the documentation
provided by Internal Revenue and copies of the Identity Cards or Passports of the parties involved, at the Title
Registry Office for the jurisdiction where the property is located where the sale is recorded.
The Title Registry Office issues a new Certificate of Title in the name of the buyer and cancels the old Certificate
issued previously to the seller. The time from the filing of the Contract of Sale to the issuance of the new
Certificate of Title may vary from a few days to a few months depending on the Title Registry Office where the
sale was recorded.
Legal fees are 1% of the actual sale price (minimum $ 800), which includes all necessary contracts for closure,
research the legal status of the property and the steps to transfer the Certificate of Title in the name the new
owner. The buyer pays for legal fees. The seller pays the real estate commission.
Transfer Taxes
The tax on property transfer is three percent (3%) of the sales value, which is calculated from the value resulting
highest between the Internal Revenue Office's appraisal and the value expressed in the contract (market value).
New Property Law for Real Estate
This new law came into effect January 1st, 2013, and the main changes are:
1.- Properties owned by an individual and assessed by the government below 6.5 Million Pesos will be exempt
of yearly property taxes and any excess will pay 1% per year.
2.- The value for all the properties that a person have will be added together and 6.5 Million Pesos will be
exempt of yearly property taxes and the excess will pay 1% per year.
3.- There were no changes to corporate owned properties. All properties owned by a company will pay 1% per
year of the assessed value with no exemptions.
Deslinde Explained – Survey & Compliance – Real Property Report
Real estate transactions in the Dominican Republic were modernized with Property Registry Law # 108-05,
which went into effect April 4, 2007. Among other things, the new law requires a “deslinde” for all real estate
transactions.
A deslinde is a legal procedure that segregates a portion of land within a parcel from all the other portions
within the same parcel. The segregated portion becomes its own parcel with its own cadastral designation
that is guaranteed by a definite title. No recorded property rights are possible without a deslinde.
The new law established a transitional period; however, beginning April 4, 2009, the Registrar of Titles will
not record any real estate transactions of a property without a deslinde.
The current procedure for deslinde has three phases: the survey phase, the judicial phase, and the registration
phase.
Survey phase: A certified surveyor measures the property using G.P.S. coordinates after giving notice to all
owners of the neighboring properties. The survey is submitted to the Regional Survey Office for review. If
approved, the Office provides the new parcel with a new cadastral designation and allows the procedure to
continue to the second phase.
Judicial phase: In this phase, the deslinde goes to the First Instance Land Court, where neighbors or any
interested third party may object. Parties must be represented by an attorney. The judge rules on the deslinde
and, if approved, the Registrar of Titles is authorized to cancel the old provisional title and issue a new
definite title with the new cadastral designation.
http://www.drproperties.ca/fully-owned-titles/
Titles
Dominican Republic has fully owned real estate
Unlike many Caribbean countries and Mexico, the title system in the DR is similar to what people are
used to in North America and most of Europe.
Titles are registered to the purchaser(s) of any property, (on both the land and building), or in the case of
a condo, on the individual unit.
There are no “bank trusts” or “leases” on properties, you are the registered owner.
TITLE INSURANCE GUARANTEE
Defined broadly as a contract of indemnity that, for a single premium, protects the insured, up to a sum,
against defects, liens or encumbrances on a real estate title. These include risks like fraud, forgery or
identity fraud, alteration or loss of title documentation, local planning issues and clerical and
typographical errors affecting title.
Property Owner with Rental Income
a) Income may be derived from rental property anywhere in the world.
b) Income must be a minimum of US$2000 per month. An additional income of US$250 per month per minor in the immediate family and
spouse accompanying the applicant must be added.
c) Proof of rental income evidenced by an official document such as a lease must be certified, authenticated, and translated into Spanish for
submission to the Immigration Department. Investor Criteria
a) The investment must be US$200,000 or more.
b) The investment may be direct or indirect, for example, a real estate transaction, a deposit in a bank account, or an investment in a project in
the Dominican Republic.
c) The investment must be registered in the Dominican Republic, evidenced by a Certificate of Investment. Regulation 214-04 on Foreign
Investment Registration stipulates the criteria for registering investments with the Department of Export and Investments (CEI-RD).
The CEI-RD issues a Certificate of Investment approximately one month from the date of application, and the Certificate must be regularly
renewed. The holder of a valid Certificate of Investment can sponsor immediate family members, if an individual, or company employees, if a
corporation, for expedited residency. Retiree Criteria
a) Income must come from a public or private plan providing retirement income.
b) Income must be at least US$1,500 per month. An additional income of US$250 per month per minor in the immediate family and spouse
accompanying the applicant must be added.
c) Proof of retirement income must be certified by the plan provider, authenticated, and translated into Spanish for submission to the
Immigration Department. Processing Time and Residency Validity Although the time for the expedited process for residency is set at forty-five days,
the actual length of the time required to obtain the Investment Residency card will depend on the time needed to authenticate documents in the
country of origin, take the medical exam, and prepare local documents for submission to the Immigration Department. Investment Residency is
valid for one year. One benefit is that within six months of obtaining this status, the foreign national may apply for “Investment Citizenship.
”One benefit is that within six months of obtaining this status, the foreign national may apply for “Investment Citizenship.” If citizenship is not
sought, the foreign national has the option of applying for permanent residency.
What is there to do in the DR?
Activities are limited only by your imagination. Sport, community, clubs, church, and more is available just
like in North America. The weather makes summer activities available all year long.
If you're watching your pesos, stick to such national drinks as rum or the local beer, El Presidente. If money
is no object, all the first-class hotels and bars sell expensive imported liquor, such as Scotch. The high import
taxes hoteliers or bars pay are reflected in the price of your drink.
DR TRADE MISSION
June 27 – July 1, 2016
Larissa Ortiz, CIPS and NAR President’s Liaison to Dominican Republic
phone: 352-425-9756 [email protected]
and the Ocala/Marion County Association of Realtors are hosting the tour to Santo
Domingo, La Romana and Punta Cana City.
http://www.floridarealtors.org/NewsAndEvents/upload/DOMINICANREPUBLIC-CARAVAN-3.pdf
CULTURE
Dominicans are a social culture. Dominicans love
getting together; they love music (the louder,
the better) and rum drinks and laughter.