Law 30-26 gives with one hand and takes with the other. It eliminates the transfer tax but creates a capital gains tax. No one has analyzed how the cost structure of a typical real estate transaction changes under the new regime
SANTO DOMINGO – In the Dominican real estate market, a sale is not just a price agreement between two parties. It is also a tax negotiation in which the buyer and seller divide between themselves, formally or informally, explicitly or absorbed into the price, the tax costs generated by the transaction.
That mechanism has not changed with Law 30-26, which has changed the composition of those costs, and the sector is only just beginning to process it.
The law gives with one hand and takes with the other. With one hand, it gradually eliminates the property transfer tax: reducing it in 2027 and abolishing it completely from 2028 onwards. With the other, it creates a 10% tax on capital gains generated from the sale of real estate by individuals.
The net result of that exchange is not neutral, it is not the same for all transactions, and it is not symmetrical for the buyer and the seller.
Tax changes in a real estate transaction
| Concept | Current situation | Change or proposal | Legal basis |
|---|---|---|---|
| Transfer tax (buyer) | 3% current | Gradual reduction by 2027 and elimination from 2028 | Art. 59, Law 30-26 |
| Capital gains (seller) | Income tax scale up to 25% | Single rate of 10% as a single and final payment | Art. 14, Law 30-26 |
| Taxable base of 10% | Defined under the traditional ISR scheme | Not defined; pending regulation | Art. 14, Law 30-26 |
| Exemption for reinvested main residence | There are benefits conditional on reinvestment | Full exemption if 100% is reinvested within 6 months; partial exemption if reinvestment is incomplete | Law 173-07 Art. 7 |
| Exemption for people over 65 years of age | Exemption with specific conditions | Full exemption without reinvestment condition | Tax Code Art. 296 |
Sources: Law 30-26 Arts. 14 and 59; Law 173-07 Art. 7; Tax Code Art. 296
The cost map before the law
To draw the contrast, we must start from the cost map that existed before June 18, 2026.
In a secondary market transaction, from owner to buyer, the main tax costs were three:
- The real estate transfer tax of 3% on the value of the property, established in article 7 of Law 173-07 on Collection Efficiency, paid by the buyer.
- The Real Estate Property Tax of 1% per year on the value of the property that exceeds the exempt minimum, established in Law 18-88 and its amendments, to be paid by the selling owner until the time of the sale.
- The capital gain generated by the sale, which in the general Income Tax regime was incorporated into the seller's income and taxed on the progressive scale for individuals, up to 25%, according to article 296 of the Tax Code.
In practice, the Dominican market had developed an informal mechanism to reduce that burden: the price declared in the deed frequently did not match the actual price of the transaction.
The Central Bank of the Dominican Republic itself documents this behavior in its working paper "Construction of a housing price index for the Dominican Republic," by Johán Félix Rosa, where it points out that in the local market it is a known practice for transactions to be registered without including some relevant detail, or incorrectly, in order to avoid paying taxes or reduce the charges for that concept.
This behavior artificially reduced the tax base, but created legal risks for both parties.
The cost map after the law
Law 30-26 significantly reorganizes that map:
- For the buyer: Article 59 gradually reduces the unified tax on real estate transactions taxed by the Mortgage Registration and Conservation Act, not the 3% direct transfer of Law 173-07, which remains in force until it is expressly repealed or amended.
This distinction is technically relevant and was not explained in the text of the law or in subsequent official communications. The sector will need to verify with the DGII (General Directorate of Internal Revenue) whether both taxes coexist or if one replaces the other in a direct sales transaction.
- For the seller: the new article 296-1 of the Tax Code creates a 10% tax on capital gains as a single and final payment, replacing taxation under the progressive scale of the ISR.
For a seller who under the previous system would have paid taxes at the highest marginal rate, 25%, the 10% reduction represents a significant decrease.
For a seller with low income who had paid taxes in the lower brackets, the impact may be neutral or greater, depending on how the regulations define the tax base.
The variable that changes the equation
The analysis of the net effect cannot be completed because the law does not define the taxable base of the new capital gains tax, the central point of the second installment of this series.
But what can be established is that the combined effect on the total cost of a transaction depends on three variables: the price of the property, the time elapsed since the original acquisition, and the way in which the regulations define the taxable gain.
To illustrate this with a scenario built on the current legal text, without resolving the unknown of the taxable base, consider a transaction in the secondary market for a property valued at US$200,000 (approximately RD$12,000,000 at the BCRD reference exchange rate of June 2026).
Under the previous system: the buyer paid RD$360,000 for the 3% transfer tax. The seller, if the profit was RD$4,000,000 and taxed at the 25% income tax bracket, would pay RD$1,000,000. Total tax cost of the transaction: RD$1,360,000, plus notary and registration fees.
Under the regime of Law 30-26 in 2027: the buyer would still pay the 3% of Law 173-07, unless clarified by the DGII and the seller would pay 10% on the capital gain.
If the taxable base were the same, RD$4,000,000, the tax would be RD$400,000, a reduction of RD$600,000 compared to the previous regime.
From 2028 onwards, when the mortgage tax is eliminated, the relief for the buyer would take effect.
This scenario is illustrative and provisional. The actual effect depends on the regulatory definition of the tax base.
How this translates into the negotiated price
In the Dominican real estate market, as in most markets in the region, closing costs are subject to negotiation between the parties. When these costs are redistributed, the price equilibrium shifts.
The most likely scenario in the short term is that sellers will adjust their minimum price downwards as the 10% effectively turns out to be less than the previous taxation, freeing up room for negotiation.
This adjustment could translate into slightly more accessible closing prices in the secondary market. However, this effect depends on the 10% tax base being calculated reasonably, which, again, refers to the pending regulations.
The Central Bank reported in its Preliminary Results January-December 2025 that loans from the financial system intended for the acquisition of homes grew 13.2% in that year, reaching RD$461,356.5 million.
This data confirms that demand for housing finance remains strong. A secondary market with less tax burden for sellers could help release the supply of properties currently held back by owners who are avoiding selling to prevent triggering the previous tax burden.
What the sector needs to know before closing
Until regulations are in place, any analysis of the net cost of a transaction is provisional. But there are questions that buyers, sellers, and real estate agents can and should ask now.
- The seller: How much did I originally pay, in what year, and with what documentation? Did I make documented improvements? Is the property my primary residence, and if I sell, will I reinvest the total amount in a new primary residence within six months? Am I over 65 years old?
- Buyer: Does the 3% transfer tax under Law 173-07 apply to this transaction in addition to the tax under Article 59 of Law 30-26, or does one replace the other? Does the property have a current Confotur classification? Am I buying from the original developer (first sale) or on the secondary market?
- Both: What is the agreed tax structure? Who absorbs each cost? And is that reflected in the contract?
These questions don't have complete answers today. But asking them is the difference between a structured transaction and one that generates tax surprises six months after closing.
Sources consulted:
- Law No. 30-26 on measures for economic growth, tax simplification and mitigation of the international crisis, Arts. 14 (new Art. 296-1 of the Tax Code) and 59, promulgated on June 18, 2026.
- Law No. 173-07 on Tax Collection Efficiency, Art. 7. General Directorate of Internal Taxes. dgii.gov.do
- Law No. 18-88 on the Real Estate Property Tax and its amendments. General Directorate of Internal Taxes.
- Tax Code of the Dominican Republic, Title II, Arts. 289 and 296. General Directorate of Internal Taxes.
- Central Bank of the Dominican Republic. Preliminary Results of the Dominican Economy January-December 2025, February 2026. Housing loans: RD$461,356.5 million, year-on-year variation +13.2%.
- Central Bank of the Dominican Republic. "Construction of a Housing Price Index for the Dominican Republic." Johán Félix Rosa, Department of Monetary Programming and Economic Studies. Working Paper, August 2021.
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