Appraised Property Value

[Jezzer]

I understand that when buying property there are transfer taxes to be paid on the appraised value of the property of approximately 4.4%.
Alternatively a corporation can be formed and then the annual property tax will be 1% of the appraised value.

I understand that this is the appraised value and not the purchase price. Does anybody know what, typically, the appriased value is as a proportion of the purchase price. I realise that it is difficult question to answer as every situation is unique.

Is it easy to find out what the appraised value for a property is before purchasing. Is it appraised only when there is a new purchase or is it done at regular intervals.

 

[Alfredo Guzman]

I understand that when buying property there are transfer taxes to be paid on the appraised value of the property of approximately 4.4%.
Alternatively a corporation can be formed and then the annual property tax will be 1% of the appraised value.

I understand that this is the appraised value and not the purchase price. Does anybody know what, typically, the appriased value is as a proportion of the purchase price. I realise that it is difficult question to answer as every situation is unique.

Is it easy to find out what the appraised value for a property is before purchasing. Is it appraised only when there is a new purchase or is it done at regular intervals.

There is simply no exact proportion: the appraised value is obtained without taking into account the purchased value.

The property will always be appraised for transfer taxes purposes or you can have it appraised for you own information on any other time.

Alfredo Guzman

 

[MickA]

How is the appraised value arrived at, and by whom?

 

[Sharlene]

This is what I paid....

As far as I'm aware it's the government who appraise the value of the property, which has nothing to do with the price the purchaser pays at time of closing. To my knowledge, as with many things in the DR, I don't think anybody quite knows exactly how they arrive at their final figures...

If it helps you, I closed on my property in Sept 06 and the estimated appraised value of my property, according to my lawyer at Guzman and Ariza, was almost the same as the purchase price resulting in an estimated tax due of 4.5% of the purchase price. However, when it came time for the transfer taxes to be paid, the true appraisal price was actually 500 dollars more resulting in a final amount due of 5.21% of the purchase price. I was given the impression that there is a website that the lawyers used to estimate the appraised value at the time of closing. I'm not sure if that website is accessible to the general public.

I'm sure that Guzman and Ariza will be able to advise.

 

[MickA]

As far as I'm aware it's the government who appraise the value of the property, which has nothing to do with the price the purchaser pays at time of closing. To my knowledge, as with many things in the DR, I don't think anybody quite knows exactly how they arrive at their final figures...

If it helps you, I closed on my property in Sept 06 and the estimated appraised value of my property, according to my lawyer at Guzman and Ariza, was almost the same as the purchase price resulting in an estimated tax due of 4.5% of the purchase price. However, when it came time for the transfer taxes to be paid, the true appraisal price was actually 500 dollars more resulting in a final amount due of 5.21% of the purchase price. I was given the impression that there is a website that the lawyers used to estimate the appraised value at the time of closing. I'm not sure if that website is accessible to the general public.


I'm sure that Guzman and Ariza will be able to advise.

Do I infer from this that it is not possible to find out the appraised value until after commiting to the purchase?

 

[Steve Costa Azul]

Land Transfer Tax

Do I infer from this that it is not possible to find out the appraised value until after commiting to the purchase?

I paid only 40 % of the actual purchase price and it was the lawyer who came up with the amount right in his head. No chart or phone call to anyone. I am told this happens all the time. Saved me a chunk of doe.
Good luck.
Steve

 

[Sharlene]

I made a vague 'suggestion' to Guzman Ariza that they might declare my property at less than the purchase price, but I was told this was not possible and that they were not responsible for calculating the appraised value.

If Guzman and Ariza couldn't just 'conjure' up a figure, and I had to wait until they were in possession of the final appraised figure, it surprises me that another lawyer could come up with the amount in his head on the spur of the moment.

I'm not questioning it, just a bit confused is all.....

 

[Fabio J. Guzman]

There are values posted by the Internal Revenue Deparment on the internet. However, there is no guarantee that these values will not change from the time the deal is made to the time the Deed of Sale is ready for filing. This has happened quite often in the last year.

 

[Sharlene]

Thank you for very much for that clarification Sr.Guzman. So, I think that verifies that there is no guarantee that the value of the transfer tax cannot change up until the Deed of Sale is ready for filing. If that is the case, then I cannot understand how it is possible for any lawyer to 'come up' with the amount 'right in his head' without any consultation whatsever.

From what has been confirmed, if a lawyer that I was dealing with had operated in this fashion, my concern would be whether the transfer taxes had actually been paid to the proper authorities..... sometimes these things don't surface until the property is put up for another sale....

 

[A.Hidalgo]

Thank you for very much for that clarification Sr.Guzman. So, I think that verifies that there is no guarantee that the value of the transfer tax cannot change up until the Deed of Sale is ready for filing. If that is the case, then I cannot understand how it is possible for any lawyer to 'come up' with the amount 'right in his head' without any consultation whatsever.

From what has been confirmed, if a lawyer that I was dealing with had operated in this fashion, my concern would be whether the transfer taxes had actually been paid to the proper authorities..... sometimes these things don't surface until the property is put up for another sale....

Read the following thread. What you are saying is correct and is backed up by the opinion of other members.


http://www.dr1.com/forums/real-estate/52946-getting-financing-canada-house-dr.html

 

[Sharlene]

Thanks for that....you just never know...

I've read all the posts in that thread and I feel happy, in the long term, that I went the route that I did. Sometimes paying a little extra at the onset can save a lot of grief later on....

 

[gmiller261]

What is the web site?

"There are values posted by the Internal Revenue Deparment on the internet"

Was this statement true?

"I don't think anybody quite knows exactly how they arrive at their final figures..."

Thanks in advance for any help.

 

[Sharlene]

There is simply no exact proportion: the appraised value is obtained without taking into account the purchased value.

Alfredo Guzman

From research that I had carried out prior to buying my property, nobody could seem to verify exactly how the appraised value was calculated, only that it had nothing to do with the purchase price. Alfredo Guzman also says in his quote above that 'There is simply no exact proportion' so that is what my comment 'I don't think anybody quite knows how they arrive at their final figures....' is based on.

With regard to the appraised figures posted on the internal revenue website, I'm afraid I don't have the details for this, but I'm sure that lots of people would be interested in looking at them if they're available to the general public.

 

[gmiller261]

Thanks Sharlene

I am hoping to see that elusive link.

Where I have a problem is that if there is no measurable standard they could, in essence, assess the home for paid value.

I am not a big fan of ?talk? and anecdotal hearsay.

Thanks again for your time.

 

[james]

This is the Govt site for calculation of property taxes

 

[james]

DGII - Direccion General de Impuestos Internos
Try that again.

 

[james]

Keeping in mind that is the Appraised Tax value for TAX PURPOSES and after that you have to figure out if you have the RD$5,000,000. deductible or if you are paying your 1% on the whole amount.
DO not confuse with an Appraisal you might have done for the market Value for resale or insurance...totally different things.

 

[gmiller261]

Thanks James

So if I have the 5MM RD deductible (and my property is assessed at 4MM RD) I would actually pay nothing in taxes? Transfer or other wise?

When can I find out if I have the 5MM deductible?

 

[Sharlene]

General property taxes and the transfer tax that you pay for the change of title when you purchase the property are two different things. When you purchase a property you pay a straight property tax of 4.4% on the appraised value of the property which is what's being discussed on this thread. There is no deductible amount.

With regard to general property taxes, I believe that they only come into effect on properties over RD$5,000,000. From what I remember that means that you pay tax on anything over this amount but that the initial RD$5,000,000 is excluded from the calculation.I am not sure whether these taxes are calculated on actual purchase cost or appraised value, perhaps somebody else could confirm.

 

[Fabio J. Guzman]

The RD$5 million pesos exemption applies only to the annual property tax (IPI), not to transfer taxes which must paid based on the full amount.