Calculation: How Much Does It Cost to Buy and Maintain an Apartment on the Coast of the Dominican Republic
June 16, 2020
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The Dominican Republic is one of the most popular destination for tourists in the Caribbean. Some of them are thinking about buying a home under the impression of white beaches, the ocean and the sun. Natalia Sevostyanova, a real estate broker from RE/MAX Tropical, told us about the amount that will result in the purchase and maintenance of apartments on the island.
What to Buy in the Dominican Republic?
Market and Prices
The market entry threshold is relatively low: you can find property even for $30,000. For this price you can get a one-bedroom apartment on a secondary market pretty far from the beach. A cheap bungalow costs about $50,000-60,000, but definitely not in a popular touristic location.
With budget of $100,000-200,000 you get a much bigger choice of real estate. Such amount of money allows you to consider modern apartments and townhouses a few km away from the coastline in Punta Cana, Cabarete, Bavaro and Sosua.
The capital of $200,000-500,000 is a great option. You can afford a house by the ocean or a luxury apartments in a new complex. With this budget you can look for accommodation at any resort.
Let's check a specific example to see how much money it takes to purchase and maintain a spacious apartments in a new building in the Dominican Republic.
Apartment by the Ocean
As an example we use a typical residential compound on the shore “The Garden”, located in Punta Cana, in the district of Bavaro, two minutes away from Los Corales beach and the Atlantic ocean. The location is popular among locals and tourists, which means that apartments are suitable for both living and renting.
The condominium consists of ten apartments and five penthouses. The project features extensive surrounding areas and terraces (more than 1000 sq. m), with fully equipped cafes, restaurants and other entertainment areas. The complex is under construction, but the date of completion is July, 2021.
How Much Do You Pay at the Purchase Stage?
The Price - $169,000
The apartment is 94 sq. m. m with two bedrooms, two bathrooms, a guest room, dining and kitchen areas.
Reservation fee – $5,000.
During the signing of the preliminary agreement, which doesn’t last longer than a month, you also need to pay 25% of the cost (including $5,000). During construction you pay 55% (the buyer can distribute payments themself). 20% is paid at the time of signing the contract of sale and transfer of the object.
On a selected apartment it looks like this in cash:
$5,000 - booking;
$37,250 - signing a preliminary agreement (no later than one month after booking);
$92,950 - under construction;
$33,800 - in the process of ownership transfer.
Natalia Sevostyanova, RE/MAX Tropical:
The payment of the first 25% is made to the account of the real estate agency, which is responsible for signing the preliminary contract and the clarity of the transaction. All subsequent amounts go directly to the developer's account.
Tax on the purchase and registration of ownership ≈ $1690
This tax is paid once in the process of registration of real estate in the name of the buyer. The tax is 3% of the property value specified in the sale contract. The exact amount is calculated by the tax authority at the time of submission of documents.
Some compounds are not subject to tax, since they are approved by the state as projects for investors. Due to this reason apartments in “The Garden” are exempt from this tax.
Natalia Sevostyanova, RE/MAX Tropical:
Given that this complex falls under the tax exemption, the cost of transferring ownership will not be 3%, but approximately 1%. The amount must be calculated and be paid during the registration of the title to the property. The process takes up to 12 months after the object is handed over to the state agency and the buyer for settlement.
Connecting communications - from $61
Contracts for electricity, Internet, water and gas (if it is available in the complex) are entered into in the name of the owner. Payment is charged by the counter.
The buyer can do this on their own. The cost of completing the contract is 3,500 pesos ($61). But with the power of attorney expenses will increase by another $100.
The registration and activation process takes approximately 7-10 days. The buyer does not need to open an account with a local bank.
Real estate agent's fee - 0$
The services of real estate agents in the Dominican Republic are paid by the seller. The amount of fees is usually 5-10% of the purchase price.
Lawyer services – $2535
The standard rate is 1.5% of the property's cost. You need to pay this amount before checking the documents for the real estate object.
All real estate transactions are accompanied by a lawyer licensed in the Dominican Republic. The buyer can pay for the services of their or an agent’s lawyer.
The lawyer guarantees the clarity of the transaction and conducts the case until the buyer receives the title to the property. Obtaining title in the name of the buyer means registration in the land register and transfer of ownership.
Notary services – $0
Natalia Sevostyanova, RE/MAX Tropical:
In the Dominican Republic some of the things are performed by a lawyer. in this case, the cost of notary services is included in the bill from the lawyer. There are cases when the notary is paid extra, and the average amount of expenses is about $300.
Translation services - $0
Natalia Sevostyanova, RE/MAX Tropical:
It is the client's right to use the translator or not. Services cost $50-100 per hour. It is not always necessary: if the agent speaks your language, they accompany you at all stages of the transaction, advise and translate during the purchase process. Our employees speak Russian, English, Spanish, German and French.
Furniture - from $20,000
Furnishing requires an amount of $20,000-$35,000, depending on the layout. This is a separate optional service.
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Is It Expensive to Maintain an Apartment in the Dominican Republic?
Let's make a calculation for a situation when housing is actively used 365 days a year.
If you buy property for short-term vacations, then the cost of utilities will be reduced, and other expenses (like taxes, fees for the maintenance of the communal territory) will be compensated, if the property is rented out during your absence.
Annual property tax – $0 for the first 15 years
Owners of real estate worth less than 7 million pesos ($120,690) in the Dominican Republic are exempt from the annual property tax. For items that are more expensive, the entire cost is taxed at the rate of 1%.
For apartments in “The Garden” the investor will pay 1% of the cost from the 16th year after the start of construction, minus the non-taxable part: ($169 000 − $120 690) * 0,01 = $483,1.
Why paying only in 15 years?
Some residential properties in tourist areas of the Dominican Republic are exempt from property tax for 15 years. Such benefits are available mainly to large developers and only in those real estate objects that a special state commission recognizes as significant for the development of a specific tourist region. The term of 15 years is set from a fixed date approved by the commission, which is usually the first day of the construction.
Condo fee – $282 per month
The cost of monthly maintenance includes gas, water, Internet, TV, cleaning, pool cleaning, garbage removal, services-gardener, insurance on the building structure. The rate is about $3 per square meter per month (condo fee). Payment is possible in cash at the office of the management company, as well as by bank transfer or via the app.
Utilities ≈ $240 per month
In this particular case, you will only have to pay for electricity.
Natalia Sevostyanova, RE / MAX Tropical:
The cost depends on the use of electrical appliances and can range from 6,000 to 60,000 thousand pesos (from $100 to $1,000), if you open windows and do not use the air conditioners. The tariff has nothing to do with it, it is inexpensive – $0.26 per kW. Moderate use of air conditioning by a family costs about 14,000 Dominican pesos ($241) per month. You can pay for electricity with a card via the app or at special payment points.
The Summary Table of Expenses for Buying and Maintaining an Apartment in the Dominican Republic
Types of expenses during purchasing
Apartment price
$169,000
Realtor's fee
$0
Lawyer's fee
$2,535
Notary services
$0
Real estate purchase tax
about $1,690*
Traslator's fee
$0
Connecting communications
$61
Furnishing
$20,000+
Total amount:
$196,286
Types of expenses during maintaince
Real estate tax
$0 first 15 years,
$484 from 16s year and further
Condo fee
$3,384
Utilities
$2,880**
Total amount:
$6,264
*Only in this particular case.
**Only if you live in the apartment all year-round.
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Natalia Sevostyanova, RE/MAX Tropical:
Most foreigners do not live in Dominican houses and apartments permanently, but come on vacation. The rest of the year the property is rented out to pay for it’s maintenance and income. The average yield in tourist areas is about 7% per annum.
