The CONFOTUR LAW and its benefits page 2 - Dominican Republic forum

Kat11 · 2019-03-28T13:58:28+01:00

When looking in Punta Cana at New Villas or condos there is a law that applies...the CONFOTUR Law No.158-01 which is "Promotion of Tourism". The law is aimed at projects in tourist real estate destinations in order to encourage tourism in the area. The law saves the buyer the 3% Transfer Tax (3% of value of property) and if spending over approx $148,000US it saves you the 1% property tax for period of 15 years, under $148,000US (approx) property is tax exempt. My question is why don't I see this incentive listed in any new construction communitee listings when looking at the North Coast real estate?

The CONFOTUR LAW and its benefits

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Guest2022 Guest

Guest2022Guest27 May 2022 19:47:42

#41

214245

Where did I mention ITBIS as being a personal income tax?

UkuleleFrank is doing the right thing asking DGII as suggested.

planner Dominican Republic Expert

Member since 27 December 2010

Dominican Republic Expert

plannerDominican Republic Expert27 May 2022 19:58:38

#42

17158

You didnt it was a general comment.聽聽We are confusing ON the thread聽 the ITBIS and the聽 INCOME TAX issues.聽 I wanted to keep it straight.聽

Those are two separate and distinct taxes each with their own set of rules.

RoCamilo Active member

Member since 15 October 2021

RoCamiloActive member31 May 2022 00:29:58

#43

The management company excluded rental income taxes from my gains this time after I raised the question. It was the first distribution since they started managing properties. My attorney at Guzm谩n Ariza insists that rental income is tax except for the 15 year period since the contruction was completed. The management company is consulting their own attorneys and will hopefully have an answer before November, when they will send distributions again.

DRVisitor Serial expat

Member since 20 December 2019

DRVisitorSerial expat31 May 2022 01:15:56

#44

712

You mention rental income taxes - is that taxes from income they want to with hold or taxes on the rental property itself? If it is taxes from income how would they know how much to withhold from you?

Tippj Serial expat

Member since 12 February 2022

TippjSerial expat31 May 2022 01:37:49

#45

564

Is the management company going to withhold your taxes that you聽鈥� might鈥� owe the government聽 ,聽 if so how聽 does that work , is that money聽 that was part of income from rent after all your expenses are paid for upkeep 鈥e maids ser.聽 ; maintenance and management fee..?

planner Dominican Republic Expert

Member since 27 December 2010

Dominican Republic Expert

plannerDominican Republic Expert31 May 2022 01:47:55

#46

17158

As a company using a service of another - example electrical engineer - if he invoices me using only his cedula and not using a factura fiscal, I must withhold and remit 10% of his payment.聽

I assume that rental income distribution may have a similar withholding.

This is a very complicated subject! I need to find an English speaking tax expert to help us!

rfmaurone Serial expat

Member since 05 February 2022

rfmauroneSerial expat31 May 2022 13:34:53

#47

201

Would really like to have an English speaking tax expert too.

Tonydr Member

Member since 04 June 2012

TonydrMember27 June 2022 14:56:28

#48

About the tax on rental income on a confotur property. My understanding is (what has been told by my lawyer):

- if you buy a property you will get the 15 year tax advantage, no doubt on that

BUT:

- if you do airbnb on yourself you will have to pay income tax over the gained rental income

- if you do the rental with the company you bought from, you will NOT pay this rental income tax. But only if you use the rental office from the company where you bought the property of.

planner Dominican Republic Expert

Member since 27 December 2010

Dominican Republic Expert

plannerDominican Republic Expert27 June 2022 15:36:36

#49

17158

That does not sound correct!

LT American Active member

Member since 01 July 2021

LT AmericanActive member27 June 2022 16:15:18

#50

You form a Corporation in the Dominican Republic. The corporation owns the property. Then you apply for the Confotur permit...many lawyers see this as an opportunity to retire on the fees. Lol..so shop around. When you apply for the permit you submit it as a rental, bed and breakfast etc...this is really where the lawyer comes in

If you are building a villa, apartment complex etc....same steps. You get all of the permits for building. Submit this with the architectural plans and it's designation B&B, hotel聽 etc for the Confotur permit...better have a good lawyer if you are building a villa . When you get the Confotur permit, building materials are tax free. You have to keep every receipt and have your accountant submit those to tax authority.

The income derived from the rental is tax free. If you sell the property, the profit from the sale is tax free....the window for this is 10 years.聽

Tonydr Member

Member since 04 June 2012

TonydrMember27 June 2022 16:38:35

#51

It is my understanding that if the developer has to apply and get approval for the Confotur law, and not the buyer.

The window as you say is 10 years, in most of the cases I have seen (and spoken to lawyers) its 15 years.

What makes sense is to buy a confotur property and put it in a company, so if you sell the next buyer can continue with these tax advantages.

Building a villa, you will not get confotur, is my understanding. However, there are villa projects, where confotur law is applied.

But it seems there is confusion on when you do not have to pay income tax over the rental income. I spoke with several confotur projects. Until now I have different answers:

- you can rent privately and directly with airbnb without any issues and do not pay income tax over the rental income

- and others tell me that you need to use the rental office from the promotor who has the confotur applied.

It seems that some confotur approvals are different.

planner Dominican Republic Expert

Member since 27 December 2010

Dominican Republic Expert

plannerDominican Republic Expert27 June 2022 16:38:37

#52

17158

Great info LT.聽

The part I felt was incorrect is this:

BUT:

- if you do airbnb on yourself you will have to pay income tax over the gained rental income

- if you do the rental with the company you bought from, you will NOT pay this rental income tax. But only if you use the rental office from the company where you bought the property of.

I think they said this聽 to MAKE you rent via them.

jeanchris101 Active member

Member since 01 June 2021

jeanchris101Active member27 June 2022 20:06:08

#53

lol 99% they said this so you rent with them.

Classical DR stuff

ddmcghee Dominican Republic Expert

Member since 15 May 2017

ddmcgheeDominican Republic Expert28 June 2022 13:33:01

#54

1740

@Tonydr So that means if you put your property into the developer's rental pool, the rental income is supposedly tax-free? I could definitely see a developer saying that just so that they could get commission on all the rentals!

Our apartment at Playa Bonita was covered by CONFOTUR so we didn't pay a transfer fee or property taxes, but we paid taxes every year on the rental income. Ours was owned under a company name, and for many years the 1% of assets was higher than the tax based on rental income.

Guest2022 Guest

Guest2022Guest17 August 2022 21:56:57

#55

214245

@RoCamilo hello, can you share your attorney's contact info and would you recommend him/her?

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