Capital Gains Tax When Selling Property in the Dominican Republic

Most buyers plan the purchase in detail and never think about the exit until they are ready to sell. That is a mistake — the tax you pay when you sell can take a real bite out of your return, and a few decisions at purchase time affect it. This guide explains how capital gains tax works on Dominican property, with a worked example and the legitimate ways to reduce it.

How Capital Gains Tax Works in the Dominican Republic

When you sell a property for more than you paid, the profit — the capital gain — is taxed at 27%. It is administered by the DGII and paid by the seller at the time of sale.

The key thing foreign sellers get wrong is assuming 27% applies to the full difference between purchase and sale price. It does not. It applies to the taxable gain, which is smaller — because the law lets you adjust your original cost for inflation and deduct allowable expenses.

Key Takeaway: Capital gains tax is 27% — but on the adjusted gain, not the raw price difference. Inflation indexing of your acquisition cost can reduce the taxable amount significantly, especially on a property held for many years.

What Counts as the "Gain"

The taxable gain is roughly:

Sale price − (inflation-adjusted acquisition cost + allowable expenses)

• Acquisition cost is what you originally paid, indexed for inflation using the official adjustment factor. The longer you have held the property, the larger this adjustment, and the smaller your taxable gain.
• Allowable expenses can include documented capital improvements and certain transaction costs. Keep every receipt — undocumented spending does not reduce your tax.

Because of the inflation adjustment, a property that doubled in nominal value over a decade may show a much smaller taxable gain than the headline numbers suggest.

Worked Example

Suppose you bought for $250,000 and sell years later for $400,000.

• Raw difference: $150,000
• After indexing your $250,000 cost for inflation and deducting documented improvements, the taxable gain might be roughly $110,000 (illustrative — the exact figure depends on the inflation factor and your records).
• Capital gains tax at 27%: about $29,700

The same sale with no inflation adjustment would imply $40,500 — so the indexing and deductions matter. Your attorney or accountant calculates the precise figure using the official factors.

Stat: 27% — The capital gains rate on the adjusted gain when you sell Dominican property. Good records and inflation indexing are what keep the taxable base down.

Who Pays, and When

The seller pays capital gains tax, and it is settled as part of the sale. The buyer's transfer tax and your capital gains tax are separate obligations on opposite sides of the transaction. You will also typically pay the real estate agent commission of 3–5% as the seller. For the full seller's process beyond the tax, see this guide to selling property in the Dominican Republic.

How CONFOTUR and Law 171-07 Reduce It

Two programs can lower or eliminate the tax:

• CONFOTUR — properties certified under the tourism incentive program receive broad tax exemptions during the incentive period, which can include relief on the gain. Verify what your specific resolution covers.
• Law 171-07 — investors who qualify for residency under the $200,000 investment route receive tax advantages including a 50% reduction on certain property and capital-gains taxes. See our foreign-ownership and residency guide.

Holding Through a Company

If you hold the property through a Dominican company (SRL/EIRL), the gain is taxed within the company's income at the flat 27% ISR rate rather than as a personal capital gain. The structures interact with your home-country taxes too. This is a decision to make before you buy, with a cross-border tax advisor — not at sale time.

Plan for the Exit Before You Buy

The cleanest way to manage capital gains tax is to set up for it at purchase: hold title in the right structure, keep meticulous records of your acquisition cost and every improvement, and understand whether CONFOTUR or 171-07 applies to you. For where this fits in the wider process, see our guide to buying property in the Dominican Republic, and the closing costs and property tax you pay along the way.

Frequently Asked Questions

What is the capital gains tax rate in the Dominican Republic?

27%, applied to the adjusted gain — the sale price minus your inflation-indexed acquisition cost and allowable expenses — not the full difference between purchase and sale price.

Who pays capital gains tax in the DR, buyer or seller?

The seller. The buyer pays the separate 3% transfer tax. Capital gains tax is the seller's obligation on their profit from the sale.

How is the taxable gain calculated?

Sale price minus your acquisition cost (indexed for inflation using the official factor) minus documented allowable expenses such as capital improvements. Good records lower the taxable base.

Can I reduce or avoid capital gains tax in the DR?

Yes, in some cases. CONFOTUR-certified properties receive exemptions during the incentive period, and Law 171-07 investor residents get a 50% reduction on certain property and capital-gains taxes. Inflation indexing and documented expenses also reduce the taxable gain.

Do foreigners pay a higher capital gains rate?

No. The 27% rate is the same for foreign and Dominican sellers. There is no foreigner surcharge.

Does holding through a company change the tax?

Yes. A Dominican company pays the gain as part of its income at the flat 27% ISR rate, and the structure interacts with your home-country taxes. Decide on the ownership structure before buying, with professional advice.