Taxes must be paid before filing the purchase at the Title Registry Office. Taxes and expenses on the conveyance of realestate are approximately 3% of the government-appraised value of the property, as follows:
• 3% Transfer Tax (Law # 288-04)
Taxes are paid based on the market value of the property asdetermined by the tax authorities, not on the price of purchase stated in the deed of sale.
Buyers wishing to lessen the impact of transfer taxes have the option of using a loophole in the lawwhich allows the contribution in kind of property into corporations without paying transfer taxes. For this, cooperation from the seller is essential.
Properties held in thename of an individual are subject to an annual property tax ("IPI") of 1% of government-appraised value in excess of RD$5,000,000 pesos except for unbuilt lots or farms outside city limitsand properties whose owner is 65 years old or older, who has registered it in his or her name for more than 15 years and has no other property.
If the property is held by a corporation, noproperty tax is due. Instead, the corporation must pay a 1% tax on corporate assets. However, any income tax paid by the corporation will constitute a credit toward the tax on assets, sothat if corporate income taxes paid are equal to or higher than the taxes on assets due, the corporation will have no obligation to pay taxes on its assets.
Legal fees, thestandard rate is 1% of the purchase price, which usually includes advice on negotiating the purchase, the required steps to check the status of the propriety, the wording of the Pledge of Saleand Purchase Agreement, as well as notary legalizing the payment of transfer taxes, registration of the Purchase Agreement in the Title office, and obtain the Title. In the name of THE BUYER