The Investor’s Holy Grail: Understanding the CONFOTUR Tax Law in the Dominican Republic
How smart investors are saving tens of thousands of dollars on Caribbean real estate and why buying "new" is the only way to get them.
When you dream of buying property in the Dominican Republic, you are likely picturing turquoise waters, swaying palms in Las Terrenas, and a relaxed pace of life. You probably aren’t dreaming about tax codes, government acronyms, or closing costs.
However, if you are serious about maximizing your return on investment (ROI), there is one word you need to memorize before you sign a single contract: CONFOTUR.
At Navetta Properties, we believe that a great investment isn't just about finding the perfect villa; it’s about structuring the purchase to protect your wealth. The Dominican Republic offers one of the most aggressive tax incentive programs in the Caribbean, known as Law 158-01 (CONFOTUR). For qualified properties, this law essentially creates a tax haven for investors.
In this guide, we will break down exactly what CONFOTUR is, calculate your real world savings, and explain why being the first buyer is critical to unlocking these benefits.
What is CONFOTUR?
CONFOTUR stands for the Consejo de Fomento Turístico (Tourism Promotion Council). It is the regulatory body responsible for applying Law 158-01, which was enacted to stimulate tourism development in the Dominican Republic.
The government recognized that to compete with other global destinations, they needed to attract high quality construction and foreign capital. To do this, they created a suite of tax incentives designed to encourage developers to build hotels, resorts, and residential tourist communities in specific areas (like Samaná, Punta Cana, Puerto Plata and Las Terrenas) that have high ecological and touristic value.
While the law was originally written to help developers build hotels, it benefits you, the individual buyer, just as much. When a residential development is approved under CONFOTUR, the tax benefits "flow down" to the first buyer of the condo or villa.
The "Big Two": Your Direct Financial Benefits
If you buy a property that is not under the CONFOTUR umbrella, you are subject to standard Dominican property taxes. If you buy a new property with CONFOTUR, you are exempt from the two most significant taxes for a period of up to 15 years.
Here is the breakdown of the savings:
1. The Transfer Tax Exemption (Immediate Savings)
In a standard real estate transaction in the Dominican Republic, the buyer must pay a 3% Transfer Tax (Impuesto de Transferencia) based on the appraised value of the property to transfer the Title Certificate into their name.
Without CONFOTUR: On a $350,000 USD condo, you would write a check to the government for $10,500 USD at closing.
With CONFOTUR: You pay $0.
This is immediate liquidity that stays in your pocket, allowing you to furnish your new apartment or cover other closing fees.
2. The IPI Tax Exemption (Long Term Wealth)
This is where the savings truly compound. The IPI (Impuesto Patrimonio Inmobiliario) is the annual Real Estate Property Tax. Currently, it is levied at 1% per year on the value of the property exceeding a certain threshold (adjusted annually for inflation, currently around $170,000 USD for individuals).
Without CONFOTUR: You are required to file and pay this 1% tax every year.
With CONFOTUR: You are 100% exempt from this annual property tax for the duration of the project's classification period.
The "10 vs. 15 Years" Question
You will often hear these two numbers used interchangeably, so let's clarify.
Originally, Law 158-01 granted exemptions typically for 10 years. However, an amendment (Law 195-13) extended this period to 15 years to make the country more competitive.
Today, while 15 years is the standard for most new major developments, the exact duration is determined by the specific Resolution granted to each project by the Ministry of Finance. It is vital to check the specific resolution for the project you are buying into.
The Math: A Real World Scenario
Let’s look at the numbers. Assume you are purchasing a luxury 2 bedroom apartment in a new development in Las Terrenas priced at $350,000 USD.
Scenario A: Buying a Standard Resale (Non CONFOTUR)
Purchase Price: $350,000
Transfer Tax (3%): $10,500 (Paid at closing)
Annual IPI Tax (Estimated 1% on surplus): ~$1,800 per year.
15 Year Tax Cost: ~$27,000 (IPI) + $10,500 (Transfer) = ~$37,500 Total Tax Liability.
Scenario B: Buying a CONFOTUR Project with Navetta Properties
Purchase Price: $350,000
Transfer Tax: $0
Annual IPI Tax: $0
15 Year Tax Cost: $0.
The Result: By choosing a CONFOTUR property, you have essentially saved nearly $40,000 USD over the life of your investment.
Important: Does CONFOTUR Apply to Resales?
No. This is the most common misconception, and it is vital for investors to understand.
The CONFOTUR benefits are explicitly designed to incentivize the development of new tourism projects. Therefore, the tax exemptions are granted only to the first buyer (the "First Acquirer") who purchases directly from the developer.
If you sell your CONFOTUR unit: The new buyer (Second Acquirer) will not inherit your tax exemptions. They will be required to pay the 3% Transfer Tax upon purchase and will be liable for the annual IPI tax moving forward.
The Strategic Takeaway: This rule makes pre construction and new development properties significantly more valuable than resales. When you buy new with Navetta Properties, you are securing a tax advantaged asset that a resale buyer simply cannot access.
Is Every Property in Las Terrenas Exempt?
No. Just because a condo is in Las Terrenas (a designated tourism zone) does not mean it automatically gets the tax break.
The developer must go through a rigorous application process with the Ministry of Tourism (MITUR) and the Ministry of Finance to obtain a "Definitive Classification".
Verification is Key: At Navetta Properties, we perform due diligence on every pre construction development we represent. We verify that the project has received the necessary resolutions so you can sign your contract with confidence.
A Note for Foreign Investors
One of the best aspects of the CONFOTUR law is that it does not discriminate based on nationality.
No Restrictions: You do not need to be a Dominican citizen or resident to claim these benefits.
Legal Certainty: The law provides a stable legal framework, protecting your rights as a foreign investor just as strictly as a local investor.
Frequently Asked Questions
1. Can I transfer the CONFOTUR benefits if I sell the property? No. The benefits are exclusively for the first purchaser. The new buyer will be subject to standard Dominican property taxes.
2. How long does the exemption last? The standard period is 15 years from the date the project officially completes construction and receives its final documentation, though some older resolutions may specify 10 years.
3. Can I use the property as a full time residence? Yes. While the law is designed to promote tourism, there are generally no restrictions preventing owners from using the property as a full time residence or a vacation home.
The Navetta Approach: Maximizing Your Investment
Navigating the tax laws in a foreign country can be intimidating, but it is the key to a profitable investment.
At Navetta Properties, we specialize in identifying high yield real estate opportunities in Las Terrenas and the Samaná Peninsula that offer these specific tax shelters. We don't just sell you a view; we help you find a smart financial asset.
Are you ready to explore tax free Caribbean living? Browse our portfolio of CONFOTUR approved developments today, or contact us to discuss which projects offer the best combination of ROI and tax efficiency.
Disclaimer: Navetta Properties provides this information for educational purposes. We always recommend that our clients consult with a local attorney and tax professional to understand their specific tax liabilities.