On a "flying" flight to New Jersey, Brenda receives from her lawyer cousin the unexpected guidance she needed to understand what is best for her in the Dominican Republic and the United States tax systems.
SANTO DOMINGO. – Brenda went into the Banreservas branch on 181st Street in Washington Heights to ask about the requirements for a mortgage loan and, while she was there, to take shelter from the rain and ward off the cold of 3 degrees Celsius on the eve of December.
She left with some brochures and her head spinning, because even though they explained things to her, she hadn't understood much. She would have to come back another time, when she had more time, so she went to La Casa del Mofongo, bought dinner to go, and headed to catch her bus at the George Washington Bridge bus stop.
When she arrived, one had just left, so she had to wait a few minutes. Someone touched her shoulder and covered her eyes from behind. She wasn't scared; she knew it was someone she knew. She reached behind her back, and the person said, "César, it's been so long!" It was her cousin, also Dominican, with a broad smile, a lawyer for almost two decades in Queens. "What's with that face of someone who's running the country?" he said.
Brenda put away her notebook, took out her gloves, and put them on because it was colder up there. César complimented her, saying things like, "You look beautiful," and "You don't age," and she just smiled.
-It's so good to see you, God put you in my path. Look, I just left the bank, I took advantage of being nearby to ask about the process of buying a house in Santo Domingo. I want to go there, grow old there, with the warmth, this cold weather is boring me.
"But cousin, tell me how I can help you. That's exactly what I do. Today I went to the Five Boros visiting people, and now I'm going to have dinner at a girl's place I met. She lives in Hackensack.".
-You're hopeless- a sweet and spicy aroma reached his nose, prompting some to ask: "And who is carrying that delicacy?"
– And is that an arepa you're taking to a girlfriend? – Brenda said, laughing, and began to tell him the story of the house she wants to buy in her homeland.
From New York to New Jersey by plane
Once on the bus, a real speedboat, Brenda pulled out her notebook to make sure she didn't miss a thing, grabbed her pencil to jot down César's instructions, and explained everything she had researched. She asked the driver to turn the music down a bit because even sitting next to her cousin, they couldn't hear each other.
-César, I want to retire in Santo Domingo . I'm looking at houses between RD$8 and RD$10 million . That's about US$133,000 to US$166,000 , right?
"That's right," he confirmed. "But before we start looking for houses, we need to talk about taxes , because you have dual citizenship . That could work in your favor... or complicate things if you don't know how to handle it."
Brenda opened her eyes and mouth at the same time. No one had ever told her anything about things getting complicated.
-Oh my God, don't tell me!
-Relax, I didn't mean to scare you, woman. Listen carefully.
Should I buy as a Dominican or as a foreigner?
The cousin began to explain everything, trying to be as brief and clear as possible given the circumstances, but he did it as if he were lecturing in a classroom. And Brenda was taking notes.
Brenda, in the Dominican Republic there's no difference between buying as a Dominican or as a foreigner. The Real Estate Registry Law of 2005 and its regulations state that every buyer, regardless of nationality, has exactly the same property rights. So you can rest assured about that.
She quickly noted it down: “✔ There is no discrimination based on nationality.”
"But," he added, raising a finger, " the strategy changes because of your taxes in the United States ."
Brenda leaned forward.
-But you're confusing me even more, don't relax, this is serious.
-Relax, listen to this, according to the Dominican Treasury, this will be your outlook:
1. Transfer Tax (ITBIS)
-According to the brochure “Property Transfer” of the DGII (General Directorate of Internal Taxes) , updated in 2025 , you must pay a single value: 3% of the value of the property to transfer it to your name.
Brenda wrote: ✔ 3% transfer fee. One-time payment.
2. Real Estate Property Tax (IPI)
-Afterwards, every year the State collects the IPI, regulated by the DGII, and in 2025 the exemption threshold is RD$10,190,833, according to the resolution published in January 2025 and it works like this:
✔ If you are a natural person (like you): You pay 1% annually only on the excess of RD$10,190,833.
Brenda looked up:
"What if I buy something between RD$8 million and RD$10 million?
" "If you buy RD$10 million, you're still exempt because you're still below the threshold.
And if it were a little more—let's say RD$10,300,000—you'd pay 1% on just RD$109,167… something like RD$1,091 a year. Very manageable."
-Ah, well, now I'm starting to understand!
-And now, let's talk about what you're really interested in: the United States, and let's take it one step at a time:
1. The IRS (U.S. Internal Revenue Service)
Look, as a U.S. citizen , whether your house is in the Dominican Republic or on Mars, you have to report it .
That doesn't mean you'll automatically pay, but it does:
✔ Include it on your federal tax return.
✔ Report rental income if you rent it out.
✔ Then deduct allowable expenses (interest, maintenance, depreciation).
"Hmph!" Brenda frowned. "So, should I buy as a Dominican or as an American? That's what I want you to tell me.".
Brenda was getting impatient.
"In the Dominican Republic it doesn't matter," César said, " it doesn't matter to the IRS . What does matter is what you do with the property ."
- If you use it only for living → You don't pay additional federal taxes .
- If you rent it out → You pay taxes on foreign income, but you can deduct expenses.
- Capital gains rules apply and you must report it.
Brenda wrote everything down on a page titled “Hacienda: USA vs RD” and then, as if it were nothing, asked him:
Is there any treaty that would prevent me from paying double? Like a free trade agreement or something…
César was emphatic: No. There is no double taxation treaty between the Dominican Republic and the United States. But the IRS offers a benefit called the "foreign tax credit": ✔ If you pay taxes on a property in the Dominican Republic, you can offset it on your U.S. tax return.
–That's why I'm asking you, what's best for me?
César was categorical: the best option for you and any Dominican with dual citizenship with the United States is:
✔ Buy as a Dominican citizen, because you don't need any additional paperwork.
✔ Declare it to the IRS as a U.S. citizen.
✔ Keep your documentation organized for deductions.
✔ Use the house as your primary residence to avoid income tax.
Brenda breathed a sigh of relief, because she finally understood something.
César had about 7 minutes left before he had to get off at the 7-Eleven on the corner where his new girlfriend was waiting for him, and while he was buttoning his jacket, getting ready to get off, he concluded:
"Cousin, what you need to do is find a good real estate agent in Santo Domingo , check out the developing areas, calculate your real costs, and don't forget that in the Dominican Republic, closing costs add up to between 3% and 4% , mainly due to the ITBIS (Value Added Tax). Keep your ledger," she added, smiling, "because that will save you from the IRS (the US tax authority, but at the federal level). And, Brenda, write this down: I'll call you later to explain the payment methods. That's serious, and now the tax authority even checks the color of the money."
Brenda closed her notebook, satisfied. She felt she was no longer dreaming; without having planned it, she had a plan laid out . She hugged her cousin, wishing him luck. When he got out of the car, she looked the friend waiting for her at the convenience store door up and down. She waved goodbye and gave them a broad smile.
"She's pretty, yes! I forgot to ask where she's from. Well, I'll call him later so he can explain the payment methods to me.".
Then she clutched the notebook to her chest and sighed with emotion and relief. For the first time, Brenda felt that her dream of retiring in Santo Domingo had a clearer path forward.
Brenda's Checklist
1) Before buying
✔ Verify the property title with the Land Registry.
✔ Confirm that the seller is indeed the owner or legal representative.
✔ Budget: RD$8 to 10 million (≈ US$133,000–166,000).
✔ Calculate the 3% transfer tax (ITBIS).
✔ Request a certificate of liens and encumbrances.
✔ Review the condominium regulations (if applicable).
✔ Verify that the property has no outstanding property tax (IPI) debts or withholdings.
✔ Verify that the property's cadastral information is up-to-date with the DGII (General Directorate of Internal Taxes).
2) When signing the contract
✔ Include the payment method: bank transfer, certified or cashier's check, bank loan letter, or a combination thereof. (DGII requirement since May 1, 2025; failure to include this information may result in the DGII rejecting the transfer.)
✔ Ensure that the amount and payment method described match the actual receipts.
✔ Keep transfer receipts, checks, and other receipts.
✔ Sign a notarized contract with accurate and transparent amounts (avoid declaring less than the actual value).
✔ Request that the notary prepare a clean file for the DGII (contract + attachments + copy of ID + receipts).
3) After purchasing
✔ Submit the contract and documentation to the DGII to pay the 3% transfer tax.
✔ Complete the process within the 6 months established by law to avoid surcharges.
✔ Register the property with the DGII for IPI purposes.
✔ Confirm that the property does not exceed the IPI exemption threshold.
✔ Maintain a file of original documents (also important for the IRS if you live in the U.S.).
4) Obligations in the United States
✔ Declare property ownership on the federal form.
✔ If you generate income: report it and deduct allowable expenses.
✔ Use the Foreign Tax Credit if you paid taxes in the Dominican Republic.
✔ Keep all payments and contracts organized for any future review.
Mini guide:
- Gather your documents: Dominican ID card or passport if you are buying as a foreigner (although in your case, it's better to buy as a Dominican).
- Calculate your initial costs: price + 3% ITBI + legal expenses (approx. 1%).
- Check the title: required .
- Sign a promise contract and then a sales agreement.
- Declare the property to the DGII for IPI purposes.
- Report the property to the IRS.
- Keep all your documents safe, always.
