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  1. #1
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    Default Two contracts for property purchase??

    Hi to everyone. I have a questions regarding real estates sales contracts in DR. Is it common to have 2 sales contracts for the same property - first with lower value for tax office and second with higher value deposited in attorney's safe that shall be paid? We were told it is a common practise here mainly when sales is done between private persons. Thanks for your feedback.

  2. #2
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    Quote Originally Posted by Danae View Post
    Hi to everyone. I have a questions regarding real estates sales contracts in DR. Is it common to have 2 sales contracts for the same property - first with lower value for tax office and second with higher value deposited in attorney's safe that shall be paid? We were told it is a common practise here mainly when sales is done between private persons. Thanks for your feedback.
    I can't wait for Mr. Guzman to answer this one.

  3. #3
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    Quote Originally Posted by johne View Post
    I can't wait for Mr. Guzman to answer this one.
    I think we already know the answer to this one.

  4. #4
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    Quote Originally Posted by windeguy View Post
    I think we already know the answer to this one.
    What a brilliant first post in the "Legal" section on a public forum.

  5. #5
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    Quote Originally Posted by Danae View Post
    Hi to everyone. I have a questions regarding real estates sales contracts in DR. Is it common to have 2 sales contracts for the same property - first with lower value for tax office and second with higher value deposited in attorney's safe that shall be paid? We were told it is a common practise here mainly when sales is done between private persons. Thanks for your feedback.
    My experience with this, told about, not done personally of course, would be one contract with a lower price on it, then the actual negotiated price paid - cash of course, with no paperwork. I have been told that this is done.

  6. #6
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    Quote Originally Posted by bob saunders View Post
    My experience with this, told about, not done personally of course, would be one contract with a lower price on it, then the actual negotiated price paid - cash of course, with no paperwork. I have been told that this is done.
    Of course i'ts done. Avoidance of taxes. In US lowering of capital gain tax. Fraud.
    Lets wait for Mr. Guzman.

  7. #7
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    And I'm certain the seller said "If you don't do it this way I'll sell it to the other guy". Special isn't it? LOL

  8. #8
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    Quote Originally Posted by johne View Post
    And I'm certain the seller said "If you don't do it this way I'll sell it to the other guy". Special isn't it? LOL
    Actually, let me clarify what has happened - we do not live un DR yet. For our future life there we have bought a property in Jardin Deportivo with "help of friend" from our homeland who lives there for 3 years already. As he kept our POA we trusted him and did not deal directly with the seller. We have got contract in hand (looks like original signed with the notary) with value we really paid via this "friend", but we did not pay to the seller directly. Also property transfer tax, notary fees and commision was paid to the "friend" from that price as if it was official. Now we learnt from someone else that second contract exists with almost 30% lower price and that is our first time to hear about. It is also signed with the notary. We are afriad to be cheated, therefore we posted such questions in DR1. Sorry if it was not appropriate.

  9. #9
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    The practice occurs everywhere, sometimes successfully sometimes not.

    From a legal perspective, clearly this practice constitutes fraud. However people like a deal so will try just about anything to reduce taxes. More and more the registrars are using book values for cars and past purchase price records and comparative assessments for real estate to assess the taxes owed for a particular transaction regardless of the amounts specified in the purchase documents . How wide spread this practice is in the DR I can't say and Sr. Guzman will certainly have his thoughts and advice.

    Case in point:

    My last rental had suffered significant structural damage due to land subsidence. In my estimation the house itself was a write off and needed to be torn down and rebuilt after reconditioning the lot. The owner offered the property to me for $1.00. My investigation determined that the tax people would want anywhere from $10K to $15K in transfer taxes, regardless of the low purchase. So it is likely that purchase prices in this country receive some degree of scrutiny and a low ball figure may trigger a reassessment or review.

  10. #10
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    Yes, this is a common practice that I have warned against for years, not only because it constitutes fraud, but also because it'll most probably come back to hit you later when you sell the property. Remember that conveyance taxes are only 3% while capital gain taxes are 20 % so the buyer who cheats to avoid paying the 3% is risking having to pay the 20% of capital gains later. Dominican tax authorities are already going after capital gains in some places.
    Fabio J. Guzman
    Guzman Ariza
    Attorneys-at-Law
    Sos�a, Santo Domingo, San Francisco de Macor�s, Cabrera
    Las Terrenas, Saman�, B�varo (Punta Cana) and La Romana
    Dominican Republic

    [email protected]


    Website

    The opinion above should not be construed to be formal legal advice and was given without reviewing the facts and documents pertinent to the case. The reader should NOT act based upon this opinion without seeking professional counsel.

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