Tax on property income in Dominican Republic
April 24, 2017
Effective Tax Rate on Rental Income
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Global Property Guide
Nonresidents are taxed on their income from Dominican Republic sources. Married individuals are assessed and taxed separately from their partners.
Income of nonresident individuals is taxed at the corporate tax rate of 27%.
Rental income of nonresident individuals is taxed at 27%. Income-generating expenses are deductible when computing for taxable income.
Rental income is subject to 10% withholding tax, which is considered as advance payment and will be credited against the taxpayer’s income tax liability.
CAPITAL GAINS TAX
Capital gains arising from the sale or transfer of property are subject to capital gains tax at a flat rate of 27%. The taxable gain is computed by deducting the acquisition cost as adjusted for inflation from the gross selling price or the market value.
Property tax is based on the cadastral value of the property as determined by the government, usually at much less than the market value. It is levied annually at a rate of 1% on the property’s cadastral value exceeding DOP6,800,000 (US$144,681). Properties with values below the threshold amount are not taxed.
Income and capital gains earned by companies are subject to corporate income tax at a flat rate of 27%. Income-generating expenses are deductible when calculating taxable income.