Property transfers will be subject to a 3% tax, a considerable reduction from the previous 5.5%. However, ?aportes en naturaleza? (contributions in kind to corporations), and transfers made through savings and loan institutions, which before were exempt from transfer taxes, will now also pay 3%.
- Thread starter Fabio J. Guzman
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Real Estate Transfer Tax Reduced to 3%
Mr. Guzman,
With some relieve I'm reading this message, while a 'lawyer' who was supposed to do the deposit for my transfer stole the money and doesnt have anything to pay it back to me. I was already thinking where do I get 50,000 pesos (the amount that I needed to pay), but now it seems to be less than 30,000.
My question is:
Is this change of % already in effect?
I was told that the % used to be 4.48 % instead of 5.5%. Which one is correct?
Thanks a lot
Mauricio
With some relieve I'm reading this message, while a 'lawyer' who was supposed to do the deposit for my transfer stole the money and doesnt have anything to pay it back to me. I was already thinking where do I get 50,000 pesos (the amount that I needed to pay), but now it seems to be less than 30,000.
My question is:
Is this change of % already in effect?
I was told that the % used to be 4.48 % instead of 5.5%. Which one is correct?
Thanks a lot
Mauricio
It used to be 4.48% + 1% document tax + sundry expenses which made it approximately 5.5%.
From what I have experienced this week, the 1% document tax is still in place. Therefore, taxes will be approximately 4% (3% + 1% document tax) instead of 3% as I had thought.
From what I have experienced this week, the 1% document tax is still in place. Therefore, taxes will be approximately 4% (3% + 1% document tax) instead of 3% as I had thought.
New Tax
Fabio: It has been a few weeks now with the new tax structure. In your experience, Is what you stated above the new breakdown? What would be the typical lawyer fee $ or % that would be added on to the above closing costs?
Fabio J. Guzman said:It used to be 4.48% + 1% document tax + sundry expenses which made it approximately 5.5%.
From what I have experienced this week, the 1% document tax is still in place. Therefore, taxes will be approximately 4% (3% + 1% document tax) instead of 3% as I had thought.
Fabio: It has been a few weeks now with the new tax structure. In your experience, Is what you stated above the new breakdown? What would be the typical lawyer fee $ or % that would be added on to the above closing costs?
Total fees and expenses would be approximately 5% (4% for the taxes and 1% for the attorney).
A correction is in order in connection with my original post. "Aportes en naturaleza" (contributions in kind) are still exempt from transfer taxes. I misinterpreted a key provision of the Tax Reform Bill when doing the summary.
A correction is in order in connection with my original post. "Aportes en naturaleza" (contributions in kind) are still exempt from transfer taxes. I misinterpreted a key provision of the Tax Reform Bill when doing the summary.
Aprtes en naturaleza
After mentioning your correction above, my lawyer still maintains the aporte is now definitely taxable at the new 3% rate. Could you please verify this?
Jay Pedro
Fabio J. Guzman said:Total fees and expenses would be approximately 5% (4% for the taxes and 1% for the attorney).
A correction is in order in connection with my original post. "Aportes en naturaleza" (contributions in kind) are still exempt from transfer taxes. I misinterpreted a key provision of the Tax Reform Bill when doing the summary.
After mentioning your correction above, my lawyer still maintains the aporte is now definitely taxable at the new 3% rate. Could you please verify this?
Jay Pedro
Mine too.....
Jay, my lawyer also has informed me of the same. They said there is no longer any difference between an "in kind" and a regular transfer as far as taxes are concerned and have stated since that is the case, its FASTER to do a regular transfer as if a sale. Hopefully Fabio will have an answer!
Jay, my lawyer also has informed me of the same. They said there is no longer any difference between an "in kind" and a regular transfer as far as taxes are concerned and have stated since that is the case, its FASTER to do a regular transfer as if a sale. Hopefully Fabio will have an answer!
This matter has caused a lot of confusion because of expectations on the part of the legal community and because of the way the amendment was drafted. Let?s go step by step.
Law 831 of 1945 established a proportional tax on transfers done by the Registrars of Title. This tax was originally 3 per 1000 and is currently 10 per 1000 or 1%.
Article 7 of Law 831 made four exceptions to the application of this tax, including, under Section (d) of Article 7, contributions in kind (?aportes?) to companies.
The new Tax Reform Bill (Law #288-04) amended the old text of Section (d) of Article 7 to say:
?d) the contributions in kind to the capital of national companies....?
Meaning that contributions in kind (aportes en naturaleza) to Dominican companies are still exempt. Contributions in kind to foreign companies, however, will now pay the proportional tax.
Many lawyers, including me, assumed upon first reading of the Tax Reform Bill, that if Section (d) was amended it could only be to suppress the exemption (which had been expected to occur) without taking into consideration that what had been done was simply to make a distinction between Dominican and foreign companies.
Law 831 of 1945 established a proportional tax on transfers done by the Registrars of Title. This tax was originally 3 per 1000 and is currently 10 per 1000 or 1%.
Article 7 of Law 831 made four exceptions to the application of this tax, including, under Section (d) of Article 7, contributions in kind (?aportes?) to companies.
The new Tax Reform Bill (Law #288-04) amended the old text of Section (d) of Article 7 to say:
?d) the contributions in kind to the capital of national companies....?
Meaning that contributions in kind (aportes en naturaleza) to Dominican companies are still exempt. Contributions in kind to foreign companies, however, will now pay the proportional tax.
Many lawyers, including me, assumed upon first reading of the Tax Reform Bill, that if Section (d) was amended it could only be to suppress the exemption (which had been expected to occur) without taking into consideration that what had been done was simply to make a distinction between Dominican and foreign companies.
Transfer Tax for in-kind contributions of property to company
Dear Dr. Guzman,
Thank you for your excellent and detailed clarification.
J.P. Waldthausen
Boston-Hanseatic Consulting and Realty S.A.
Fabio J. Guzman said:This matter has caused a lot of confusion because of expectations on the part of the legal community and because of the way the amendment was drafted. Let?s go step by step.
Law 831 of 1945 established a proportional tax on transfers done by the Registrars of Title. This tax was originally 3 per 1000 and is currently 10 per 1000 or 1%.
Article 7 of Law 831 made four exceptions to the application of this tax, including, under Section (d) of Article 7, contributions in kind (?aportes?) to companies.
The new Tax Reform Bill (Law #288-04) amended the old text of Section (d) of Article 7 to say:
?d) the contributions in kind to the capital of national companies....?
Meaning that contributions in kind (aportes en naturaleza) to Dominican companies are still exempt. Contributions in kind to foreign companies, however, will now pay the proportional tax.
Many lawyers, including me, assumed upon first reading of the Tax Reform Bill, that if Section (d) was amended it could only be to suppress the exemption (which had been expected to occur) without taking into consideration that what had been done was simply to make a distinction between Dominican and foreign companies.
Dear Dr. Guzman,
Thank you for your excellent and detailed clarification.
J.P. Waldthausen
Boston-Hanseatic Consulting and Realty S.A.
Is the Transfer Tax based on Assessed value or the Purchase Price if it is Higher ?
I am ready to close on a condo next week but I do not know for sure what I should be paying for the transfer tax. Is the transfer tax based on assessed value or the purchase price if it is higher ?
Thanks in advance for any helpful advice.
John
I am ready to close on a condo next week but I do not know for sure what I should be paying for the transfer tax. Is the transfer tax based on assessed value or the purchase price if it is higher ?
Thanks in advance for any helpful advice.
John
The transfer tax is based on market value as assessed by the government (Art. 20 of Law #288-04).
would that be
the last sale price (the price that is now being paid for the property)-or last sale price of a like and similar property??
JOHN
Fabio J. Guzman said:The transfer tax is based on market value as assessed by the government (Art. 20 of Law #288-04).
the last sale price (the price that is now being paid for the property)-or last sale price of a like and similar property??
JOHN
Neither. The appraisal is done by government officials in accordance with a preestablished price schedule depending on the location of the property and the quality of the construction. It's their interpretation of "market value".