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 as income. If you own the property personally, it is taxed on the progressive 0–25% income-tax scale (Código Tributario Art. 296), where roughly the first RD$416,000 (about $7,000) is tax-free. If a Dominican company (SRL/EIRL) owns it, the rate is a flat 27% — the corporate rate (Ley 253-12, Art. 11). 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 the tax 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 0–25% for an individual and 27% for a company — 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 for an individual seller who is a DR tax resident, on the progressive scale: about $25,200 (assuming no other Dominican taxable income that year, at roughly RD$59 per US$). A non-resident should plan on 27% and confirm with an accountant
• If a Dominican company owns the property, 27% of the gain: about $29,700

The same sale with no inflation adjustment would imply about $35,200 for the individual, or $40,500 for the company — so the indexing and deductions matter. Your attorney or accountant calculates the precise figure using the official factors.

Stat: 0–25% — The progressive rate an individual pays on the adjusted gain when selling Dominican property (a company pays 27%). 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. To see what you keep after tax and commission, use the net proceeds calculator.

Does CONFOTUR or Law 171-07 Reduce It?

Two programs can matter here:

• CONFOTUR — the exemptions belong only to the first buyer who purchased directly from the developer of a certified project, and they do not pass to a resale buyer (Ley 158-01, Art. 4, Párrafo IV). The law does not single out capital gains, and whether its income-tax exemption reaches the sale of a unit is for your attorney to confirm against your project's resolution — do not assume your sale is exempt when you price it.
• Law 171-07 — pensionados and rentistas (a foreign pension of at least US$1,500/month, or passive income of at least US$2,000/month) with valid residency pay 50% of the capital-gains tax when they sell a property bought under the law, and 50% of the annual property tax. 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?

It depends on who owns the property. An individual pays the progressive income-tax scale, 0–25%, with roughly the first RD$416,000 of gain tax-free. A Dominican company (SRL/EIRL) pays a flat 27%. Either way the rate is 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. Pensionado or rentista residents under Law 171-07 pay half the capital-gains tax on a property bought under the law, and inflation indexing and documented expenses reduce the taxable gain. CONFOTUR exemptions go only to the first buyer from the developer and do not pass to a resale buyer; the law does not single out capital gains, so confirm with your attorney before counting on it.

Do foreigners pay a higher capital gains rate?

No. The same rates apply to foreign and Dominican sellers — 0–25% for an individual, 27% for a company. There is no foreigner surcharge. A non-resident seller should confirm with an accountant how the gain is withheld and whether the progressive scale applies to them.

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.