Dominican Republic vs Puerto Rico: CONFOTUR, Act 60 and Real Yields

If you keep your home address in Texas or New Jersey, neither of the Caribbean's two famous tax deals does much of what the marketing promises. Puerto Rico's Act 60 gives you nothing unless you physically move to the island. The Dominican Republic's CONFOTUR does cut real taxes, but much of its headline saving quietly ends up with the IRS. Strip both incentives back to what a US taxpayer actually keeps, and you're left with older, plainer questions: what you pay per square metre, what you can borrow, and what the property nets.

01Dominican Republic vs Puerto Rico Real Estate: Which Suits a US Investor?

For most US investors who won't relocate, the Dominican Republic offers lower entry prices, higher gross yields (about 8.5% nationally in Q1 2026, per Global Property Guide) and CONFOTUR savings of roughly $26,700 on a $300,000 unit. Puerto Rico wins on US-style mortgages, title insurance, the dollar and simpler IRS reporting. Act 60 only matters if you move.

That last point is where most comparisons go wrong. They line up Act 60 and CONFOTUR as if they were two versions of the same product. They aren't. Act 60 is a tax regime for a person who changes residence. CONFOTUR is a tax regime attached to a tourism project that the government has approved. One is about where you live. The other is about what you buy.

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02What Does Act 60 Actually Give a Property Buyer?

Act 60 gives a property buyer nothing directly. Its best-known benefit, the Resident Individual Investor decree, exempts Puerto Rico-source dividends, interest and capital gains earned after you become a bona fide resident. It isn't a real estate incentive. The house you buy is a condition of the decree, not the thing the decree rewards.

According to Puerto Rico's Department of Economic Development and Commerce (DDEC), which administers the decrees, the investor track comes with obligations that are easy to underestimate:

• Bona fide residency. You must pass the IRS tests: at least 183 days a year on the island, a tax home there, and no closer connection to the mainland. A beach condo you visit in February doesn't count.
• A home purchase. Decree holders must buy residential property in Puerto Rico within two years, to use as their principal residence. A home you live in isn't a rental.
• Annual costs. You make a required yearly donation to Puerto Rico nonprofits, pay application and annual-report fees, and file a compliance report every year.
• Prior non-residency. You can't have been a Puerto Rico resident in the years before applying.

Rental income from a Puerto Rico investment property is generally not covered by the individual investor exemption. It's taxed under Puerto Rico's ordinary rules. For a stateside American with no plans to move, Act 60 is irrelevant to the investment case. Confirm the details of any specific situation with Puerto Rico tax counsel, because the terms for new applicants have been under legislative review.

03What Does CONFOTUR Save an American Who Stays Stateside?

CONFOTUR saves a US-resident buyer roughly $26,700 on a $300,000 unit, not the ~$71,700 a fully rented decomposition suggests. The gap is the rental income tax line, and US tax law causes it.

First, the mechanics. Under Ley 158-01 as amended by Ley 195-13, a CONFOTUR-classified project's first buyers are exempt from three taxes. The exemption on income and the annual property tax runs for 15 years from completion of the project's construction and equipping (Art. 7), not from your purchase date. On the property tax: Art. 4(b) names the old luxury-dwellings tax (IVSS), which Ley 253-12 converted into the tax DGII administers today as the IPI. Here is the standard breakdown for a $300,000 unit:

Why "largely no" on the third line? US citizens are taxed on worldwide income. When you pay Dominican tax on rental profit, you can usually claim a foreign tax credit against your US bill on that same income. When CONFOTUR exempts that income in the DR, there's no Dominican tax to credit, so the IRS collects the full US rate instead. The exemption mostly moves the tax from Santo Domingo to Washington rather than removing it. The transfer tax and IPI savings are different. Those are real costs that simply disappear.

There's one more trap. CONFOTUR benefits go only to the buyer who purchases directly from the classified project. Ley 158-01 Art. 4 Párrafo IV excludes any later transfer to a third party. If you buy a CONFOTUR unit on resale, budget for the full 3% transfer tax and annual IPI. The resale buyer gets neither exemption.

The 2026 rates used here (3% transfer tax, the progressive 0–25% individual income tax scale, 27% for companies) are the rates in force for 2026. Ley 30-26 phases in changes from 2027, so confirm the current rates with your own Dominican attorney before you model later years. Our guide to DR rental income tax without CONFOTUR covers the ordinary regime in detail.

04How Far Apart Are Entry Prices?

The Dominican Republic is substantially cheaper per square metre, and this is the strongest argument in its favour. Evalúa's November 2026 asking-price data puts the median condo in Las Terrenas' town core at $2,222/m² (n=231). It's $2,224/m² in Sosúa (n=254), $2,028/m² in Santo Domingo (n=5,288) and $2,600/m² in Punta Cana / Bávaro (n=965). Here is the live band for central Las Terrenas:

Evalúa doesn't track Puerto Rico listings, so there's no measured median we can put beside those figures. As an indicative observation from public listings, renovated oceanside condos in San Juan's Condado, Ocean Park and Isla Verde, or in Dorado, often ask $4,000/m² or more. Treat that as a rough range, not a measured number. Even taken conservatively, a US buyer with $300,000 is probably getting meaningfully more floor area, or a closer beach, in the DR.

Lower entry prices push gross yields up because the same nightly rate is earned on less capital. That's the main reason the DR's national gross yield sits around 8.5%. We don't model Puerto Rico rental yields, and you should be sceptical of any single island-wide figure you see quoted.

05What Does a DR Rental Actually Net? A Worked Example

A $300,000 two-bedroom condo in Las Terrenas grossing $19,000 a year nets about $4,450–$5,630 before income tax, depending on CONFOTUR. That's a long way from the brochure numbers, but it's honest. The Evalúa market model (May 2026) puts average Airbnb gross for a standard Las Terrenas 2BR at about $18,000–$20,000 a year, at roughly 46–48% occupancy.

The five-year line holds 2026 costs and rates flat and assumes no price growth. Later years are subject to Ley 30-26 and to whatever rents actually do. Utilities are an indicative estimate. Cleaning fees and rental-period power are paid by guests, so they don't appear here.

A net cash yield under 2% won't excite a pure income investor. The case for owning in the DR rests on three things together: personal use, the cash flow covering the carrying costs, and appreciation. National price growth was +7.74% nominal in the year to Q1 2026, but only +2.97% after inflation, and it has slowed for three years running (Global Property Guide). Plug your own occupancy and rate into our Rental Income Calculator before trusting anyone's projection, ours included. If the long-term versus short-term choice is still open, the break-even occupancy analysis for Las Terrenas is worth reading first.

06Financing, Title and Paperwork: Where Does Puerto Rico Win?

Puerto Rico wins almost every structural comparison. If you need leverage, that may outweigh the DR's price advantage entirely.

Two rows deserve emphasis. On financing, Dominican lending rates for foreigners are published through the Superintendencia de Bancos, and 10–14% on a 20-year term turns a ~1.8% net yield into negative leverage. Most US buyers in the DR pay cash, or use a HELOC on a mainland home. On reporting, any Dominican account that pushes your combined foreign balances above $10,000 at any point in the year triggers an FBAR filing with FinCEN, and larger holdings may also require Form 8938. Neither is expensive, but missing them carries steep penalties.

07Risk Factors: What Should You Watch?

Both islands sit in the hurricane belt, but the exposure isn't evenly spread. Puerto Rico took direct hits from Maria in 2017 and Fiona in 2022, and its electricity grid remains a recurring weak point. In the DR, Punta Cana's eastern tip faces Atlantic storm tracks more directly than the Samaná north coast, which has historically seen fewer direct impacts. ONAMET, the Dominican weather service, is the primary source for storm warnings. The revenue side of storm season is covered in our piece on hurricane-season cancellations.

Specific triggers worth monitoring:

• Ley 30-26 implementing rules. If DGII guidance on the new Art. 2-1 restriction limits how CONFOTUR benefits combine with other regimes, re-run the transfer tax and IPI lines before you sign.
• Act 60 reform. If Puerto Rico enacts a minimum tax on new decree holders' gains, the relocation case weakens for anyone who hasn't yet applied.
• DR price growth. If real (inflation-adjusted) growth falls below zero in Global Property Guide's next annual reading, the appreciation leg of the DR thesis is gone. You'd be left with a ~1.4–1.8% cash yield.
• Exit liquidity. DR resales can take months, and the proceeds have to be repatriated. Read selling DR property as a foreigner before you buy, not after.

08Who Should Pick Which?

Your choice comes down to whether you'll move, whether you need a mortgage, and how much paperwork you'll tolerate in exchange for price.

• Staying stateside, paying cash, wants personal use: The DR, ideally a new CONFOTUR unit bought directly from the project. Verify the resolution number, because off-plan has its own risks; see our off-plan premium analysis.
• Staying stateside, needs leverage: Puerto Rico. US-style financing beats a 10–14% Dominican loan almost every time.
• Relocating with a large investment portfolio: Evaluate Act 60 first with Puerto Rico counsel. The property is secondary.
• Pure yield hunter: Neither island is a high-cash-yield play once honest costs are deducted. Compare against your mainland alternatives.

Disclaimer: This article is general information, not tax, legal or investment advice. Cross-border US–DR and Puerto Rico taxation depends on your residency, filing status and holding structure. Consult a US cross-border CPA and a Dominican attorney before acting.

09Frequently Asked Questions

Does Act 60 apply to rental property I own in Puerto Rico?

Generally not. The Resident Individual Investor decree covers investment income such as dividends, interest and certain capital gains for bona fide residents. Rental income from Puerto Rico real estate is typically taxed under ordinary Puerto Rico rules, so confirm your situation with local tax counsel.

Is CONFOTUR worth it for a US citizen?

Yes, but for different reasons than the brochures give. The transfer tax waiver and the 15-year IPI exemption are real savings of about $26,700 on a $300,000 unit. The rental income tax exemption mostly shifts tax to the IRS, because you lose the foreign tax credit you'd otherwise claim.

Can a US citizen get a mortgage in the Dominican Republic?

Yes. Dominican banks lend to foreigners at roughly 10–14% interest with at least 30% down and terms around 20 years. At those rates, most rental properties lose money on a leveraged basis, which is why cash and mainland home-equity loans are common.

Do I have to report a Dominican bank account to the IRS?

Yes, if your combined foreign account balances exceed $10,000 at any point in the year, you must file an FBAR. Larger holdings may also trigger Form 8938. Puerto Rico accounts don't count as foreign for FBAR purposes.

Does CONFOTUR transfer if I buy a unit on resale?

No. Ley 158-01 Art. 4 Párrafo IV, added by Ley 195-13, limits the exemptions to buyers who purchase directly from the classified project. A resale buyer pays the 3% transfer tax and annual IPI like any other owner.

10The Real Comparison Isn't the Tax Deal

The usual framing of CONFOTUR versus Act 60 is close to useless for a US investor who stays on the mainland. One incentive requires you to move. The other gives you a smaller saving than advertised. Once you set both aside, the decision comes down to fundamentals. The DR offers lower prices per square metre and a property you can enjoy. Puerto Rico offers a mortgage, a title policy and a familiar legal system. Pick the island whose fundamentals match your capital and your plans, then test the specific unit. Running any DR listing through the free Evalúa Property Score shows how its asking price compares with the zone medians cited here. Our investment guides go deeper on the numbers behind each market.